10-K

UNITED  STATES  SECURITIES  AND  EXCHANGE  COMMISSION

Washington, D. C. 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM            TO
Commission File No. 1-8661

The Chubb Corporation

(Exact name of registrant as specified in its charter)

New Jersey	13-2595722
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
15 Mountain View Road
Warren, New Jersey	07059
(Address of principal executive offices)	(Zip Code)

(908) 903-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

(Title of each class)	(Name of each exchange on which registered)
Common Stock, par value $1 per share	New York Stock Exchange
Series B Participating Cumulative	New York Stock Exchange
Preferred Stock Purchase Rights

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ü] No [  ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [  ] No [ü]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ü] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ü] No [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ü]	Accelerated filer [  ]
Non-accelerated filer [  ] (Do not check if a smaller reporting company)	Smaller reporting company [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [ü]

The aggregate market value of common stock held by non-affiliates of the registrant was $13,920,104,349 as of June 30, 2009, computed on the basis of the closing sale price of the common stock on that date.

328,574,448

Number of shares of common stock outstanding as of February 12, 2010

Documents Incorporated by Reference

Portions of the definitive Proxy Statement for the 2010 Annual Meeting of Shareholders are incorporated by reference in Part III of this Form 10-K.

CONTENTS

	ITEM	DESCRIPTION	PAGE
PART I	1	Business	3
	1A	Risk Factors	12
	1B	Unresolved Staff Comments	18
	2	Properties	18
	3	Legal Proceedings	18
	4	Submission of Matters to a Vote of Security Holders	19
PART II	5	Market for the Registrant’s Common Stock and Related Stockholder Matters	20
	6	Selected Financial Data	22
	7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
	7A	Quantitative and Qualitative Disclosures About Market Risk	62
	8	Consolidated Financial Statements and Supplementary Data	65
	9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	65
	9A	Controls and Procedures	65
	9B	Other Information	66
PART III	10	Directors and Executive Officers of the Registrant	68
	11	Executive Compensation	68
	12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	68
	13	Certain Relationships and Related Transactions	68
	14	Principal Accountant Fees and Services	68
PART IV	15	Exhibits, Financial Statements and Schedules	69
		Signatures	70
		Index to Financial Statements and Financial Statement Schedules	F-1
		Exhibits Index	E-1
EX-10.1
EX-10.6
EX-10.7
EX-10.8
EX-10.33
EX-12.1
EX-21.1
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

2

PART I.

Item 1.  Business

General

The Chubb Corporation (Chubb) was incorporated as a business corporation under the laws of the State of New Jersey in June 1967. Chubb and its subsidiaries are referred to collectively as the Corporation. Chubb is a holding company for a family of property and casualty insurance companies known informally as the Chubb Group of Insurance Companies (the P&C Group). Since 1882, the P&C Group has provided property and casualty insurance to businesses and individuals around the world. According to A.M. Best, the P&C Group is the 11th largest U.S. property and casualty insurance group based on 2008 net written premiums.

At December 31, 2009, the Corporation had total assets of $50 billion and shareholders’ equity of $16 billion. Revenues, income before income tax and assets for each operating segment for the three years ended December 31, 2009 are included in Note (11) of the Notes to Consolidated Financial Statements. The Corporation employed approximately 10,200 persons worldwide on December 31, 2009.

The Corporation’s principal executive offices are located at 15 Mountain View Road, Warren, New Jersey 07059, and our telephone number is (908) 903-2000.

The Corporation’s Internet address is www.chubb.com. The Corporation’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a)of the Securities Exchange Act of 1934 are available free of charge on this website as soon as reasonably practicable after they have been electronically filed with or furnished to the Securities and Exchange Commission. Chubb’s Corporate Governance Guidelines, charters of certain key committees of its Board of Directors, Restated Certificate of Incorporation, By-Laws, Code of Business Conduct and Code of Ethics for CEO and Senior Financial Officers are also available on the Corporation’s website or by writing to the Corporation’s Corporate Secretary.

Property and Casualty Insurance

The P&C Group is divided into three strategic business units. Chubb Commercial Insurance offers a full range of commercial insurance products, including coverage for multiple peril, casualty, workers’ compensation and property and marine. Chubb Commercial Insurance is known for writing niche business, where our expertise can add value for our agents, brokers and policyholders. Chubb Specialty Insurance offers a wide variety of specialized professional liability products for privately and publicly owned companies, financial institutions, professional firms and healthcare organizations. Chubb Specialty Insurance also includes our surety business. Chubb Personal Insurance offers coverage of fine homes, automobiles and other personal possessions along with options for high limits of personal liability coverage. Chubb Personal Insurance also provides supplemental accident and health insurance in niche markets.

The P&C Group provides insurance coverages principally in the United States, Canada, Europe, Australia, and parts of Latin America and Asia. Revenues of the P&C Group by geographic area for the three years ended December 31, 2009 are included in Note (11) of the Notes to Consolidated Financial Statements.

The principal members of the P&C Group are Federal Insurance Company (Federal), Pacific Indemnity Company (Pacific Indemnity), Vigilant Insurance Company (Vigilant), Great Northern Insurance Company (Great Northern), Chubb Custom Insurance Company (Chubb Custom), Chubb National Insurance Company (Chubb National), Chubb Indemnity Insurance Company (Chubb Indemnity), Chubb Insurance Company of New Jersey (Chubb New Jersey), Texas Pacific Indemnity Company, Northwestern Pacific Indemnity Company, Executive Risk Indemnity Inc. (Executive Risk Indemnity) and Executive Risk Specialty Insurance Company (Executive Risk Specialty) in the United States, as well as Chubb Atlantic Indemnity Ltd. (a Bermuda company), Chubb Insurance Company of Canada, Chubb Insurance Company of Europe SE, Chubb Insurance Company of Australia Limited,

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Chubb Argentina de Seguros, S.A., Chubb Insurance (China) Company Ltd. and Chubb do Brasil Companhia de Seguros.

Federal is the manager of Vigilant, Pacific Indemnity, Great Northern, Chubb National, Chubb Indemnity, Chubb New Jersey, Executive Risk Indemnity and Executive Risk Specialty. Federal also provides certain services to other members of the P&C Group. Acting subject to the supervision and control of the boards of directors of the members of the P&C Group, Federal provides day to day executive management and operating personnel and makes available the economy and flexibility inherent in the common operation of a group of insurance companies.

Premiums Written

A summary of the P&C Group’s premiums written during the past three years is shown in the following table:

	Direct		Reinsurance		Reinsurance		Net
	Premiums		Premiums		Premiums		Premiums
Year	Written		Assumed(a)		Ceded(a)		Written
	(in millions)
2007	$	12,432	$	775	$	1,335	$	11,872
2008		12,443		549		1,210		11,782
2009		11,813		370		1,106		11,077

(a) Intercompany items eliminated.

The net premiums written during the last three years for major classes of the P&C Group’s business are included in the Property and Casualty Insurance — Underwriting Results section of Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A).

One or more members of the P&C Group are licensed and transact business in each of the 50 states of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, Canada, Europe, Australia, and parts of Latin America and Asia. In 2009, approximately 77% of the P&C Group’s direct business was produced in the United States, where the P&C Group’s businesses enjoy broad geographic distribution with a particularly strong market presence in the Northeast. The five states accounting for the largest amounts of direct premiums written were New York with 12%, California with 9%, Texas with 5%, Florida with 4% and New Jersey with 4%. Approximately 11% of the P&C Group’s direct premiums written was produced in Europe and 5% was produced in Canada.

Underwriting Results

A frequently used industry measurement of property and casualty insurance underwriting results is the combined loss and expense ratio. The P&C Group uses the combined loss and expense ratio calculated in accordance with statutory accounting principles applicable to property and casualty insurance companies. This ratio 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. When the combined ratio is under 100%, underwriting results are generally considered profitable; when the combined ratio is over 100%, underwriting results are generally considered unprofitable. Investment income is not reflected in the combined ratio. The profitability of property and casualty insurance companies depends on the results of both underwriting and investments operations.

The combined loss and expense ratios during the last three years in total and for the major classes of the P&C Group’s business are included in the Property and Casualty Insurance — Underwriting Operations section of MD&A.

Another frequently used measurement in the property and casualty insurance industry is the ratio of statutory net premiums written to policyholders’ surplus. At December 31, 2009 and 2008, the ratio for the P&C Group was 0.76 and 0.96, respectively.

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Producing and Servicing of Business

The P&C Group does not utilize a significant in-house distribution model for its products. Instead, in the United States, the P&C Group offers products through independent insurance agencies and accepts business on a regular basis from insurance brokers. In most instances, these agencies and brokers also offer products of other companies that compete with the P&C Group. The P&C Group’s branch and service offices assist these agencies and brokers in producing and servicing the P&C Group’s business. In addition to the administrative offices in Warren and Whitehouse Station, New Jersey, the P&C Group has territory, branch and service offices throughout the United States.

The P&C Group primarily offers products through insurance brokers outside the United States. Local branch offices of the P&C Group assist the brokers in producing and servicing the business. In conducting its foreign business, the P&C Group mitigates the risks relating to currency fluctuations by generally maintaining investments in those foreign currencies in which the P&C Group has loss reserves and other liabilities. The net asset or liability exposure to the various foreign currencies is regularly reviewed.

Business for the P&C Group is also produced through participation in certain underwriting pools and syndicates. Such pools and syndicates provide underwriting capacity for risks which an individual insurer cannot prudently underwrite because of the magnitude of the risk assumed or which can be more effectively handled by one organization due to the need for specialized loss control and other services.

Reinsurance Ceded

In accordance with the normal practice of the insurance industry, the P&C Group cedes reinsurance to reinsurance companies. Reinsurance is ceded to provide greater diversification of risk and to limit the P&C Group’s maximum net loss arising from large risks or from catastrophic events.

A large portion of the P&C Group’s ceded reinsurance is effected under contracts known as treaties under which all risks meeting prescribed criteria are automatically covered. Most of the P&C Group’s treaty reinsurance arrangements consist of excess of loss and catastrophe contracts that protect against a specified part or all of certain types of losses over stipulated amounts arising from any one occurrence or event. In certain circumstances, reinsurance is also effected by negotiation on individual risks. The amount of each risk retained by the P&C Group is subject to maximum limits that vary by line of business and type of coverage. Retention limits are regularly reviewed and are revised periodically as the P&C Group’s capacity to underwrite risks changes. For a discussion of the P&C Group’s reinsurance program and the cost and availability of reinsurance, see the Property and Casualty Insurance — Underwriting Results section of MD&A.

Ceded reinsurance contracts do not relieve the P&C Group of the primary obligation to its policyholders. Thus, an exposure exists with respect to reinsurance recoverable to the extent that any reinsurer is unable to meet its obligations or disputes the liabilities assumed under the reinsurance contracts. The collectibility of reinsurance is subject to the solvency of the reinsurers, coverage interpretations and other factors. The P&C Group is selective in regard to its reinsurers, placing reinsurance with only those reinsurers that the P&C Group believes have strong balance sheets and superior underwriting ability. The P&C Group monitors the financial strength of its reinsurers on an ongoing basis.

  Unpaid Losses and Loss Adjustment Expenses and Related Amounts Recoverable from Reinsurers

Insurance companies are required to establish a liability in their accounts for the ultimate costs (including loss adjustment expenses) of claims that have been reported but not settled and of claims that have been incurred but not reported. Insurance companies are also required to report as assets the portion of such liability that will be recovered from reinsurers.

The process of establishing the liability for unpaid losses and loss adjustment expenses is complex and imprecise as it must take into consideration many variables that are subject to the outcome of future events. As a result, informed subjective estimates and judgments as to our ultimate exposure to losses are an integral component of our loss reserving process.

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The anticipated effect of inflation is implicitly considered when estimating liabilities for unpaid losses and loss adjustment expenses. Estimates of the ultimate value of all unpaid losses are based in part on the development of paid losses, which reflect actual inflation. Inflation is also reflected in the case estimates established on reported open claims which, when combined with paid losses, form another basis to derive estimates of reserves for all unpaid losses. There is no precise method for subsequently evaluating the adequacy of the consideration given to inflation, since claim settlements are affected by many factors.

The P&C Group continues to emphasize early and accurate reserving, inventory management of claims and suits, and control of the dollar value of settlements. The number of outstanding claims at year-end 2009 was approximately 3% lower than the number at year-end 2008. The number of new arising claims during 2009 was approximately 8% lower than in the prior year.

Additional information related to the P&C Group’s estimates related to unpaid losses and loss adjustment expenses and the uncertainties in the estimation process is presented in the Property and Casualty Insurance — Loss Reserves section of MD&A.

The table on page 7 presents the subsequent development of the estimated year-end liability for unpaid losses and loss adjustment expenses, net of reinsurance recoverable, for the ten years prior to 2009.

The top line of the table shows the estimated net liability for unpaid losses and loss adjustment expenses recorded at the balance sheet date for each of the indicated years. This liability represents the estimated amount of losses and loss adjustment expenses for claims arising in all years prior to the balance sheet date that were unpaid at the balance sheet date, including losses that had been incurred but not yet reported to the P&C Group.

The upper section of the table shows the reestimated amount of the previously recorded net liability based on experience as of the end of each succeeding year. The estimate is increased or decreased as more information becomes known about the frequency and severity of losses for each individual year. The increase or decrease is reflected in operating results of the period in which the estimate is changed. The “cumulative deficiency (redundancy)” as shown in the table represents the aggregate change in the reserve estimates from the original balance sheet dates through December 31, 2009. The amounts noted are cumulative in nature; that is, an increase in a loss estimate that is related to a prior period occurrence generates a deficiency in each intermediate year. For example, a deficiency recognized in 2009 relating to losses incurred prior to December 31, 1999 would be included in the cumulative deficiency amount for each year in the period 1999 through 2008. Yet, the deficiency would be reflected in operating results only in 2009. The effect of changes in estimates of the liabilities for losses occurring in prior years on income before income taxes in each of the past three years is shown in the reconciliation of the beginning and ending liability for unpaid losses and loss adjustment expenses in the Property and Casualty Insurance — Loss Reserves section of MD&A.

6

ANALYSIS OF LOSS AND LOSS ADJUSTMENT EXPENSE DEVELOPMENT

	December 31
Year Ended	1999		2000		2001		2002		2003		2004			2005			2006			2007			2008			2009
	(in millions)
Net Liability for Unpaid Losses and Loss Adjustment Expenses	$	9,749	$	10,051	$	11,010	$	12,642	$	14,521	$	16,809		$	18,713		$	19,699		$	20,316		$	20,155		$	20,786
Net Liability Reestimated as of:
One year later		9,519		9,856		11,799		13,039		14,848		16,972			18,417			19,002			19,443			19,393
Two years later		9,095		10,551		12,143		13,634		15,315		17,048			17,861			18,215			18,619
Three years later		9,653		10,762		12,642		14,407		15,667		16,725			17,298			17,571
Four years later		9,740		11,150		13,246		14,842		15,584		16,526			16,884
Five years later		9,999		11,605		13,676		14,907		15,657		16,411
Six years later		10,373		11,936		13,812		15,064		15,798
Seven years later		10,602		12,019		13,994		15,255
Eight years later		10,702		12,170		14,218
Nine years later		10,828		12,364
Ten years later		11,011
Total Cumulative Net Deficiency (Redundancy)		1,262		2,313		3,208		2,613		1,277		(398	)		(1,829	)		(2,128	)		(1,697	)		(762	)
Cumulative Net Deficiency Related to Asbestos and Toxic Waste Claims (Included in Above Total)		1,480		1,449		1,388		647		397		322			287			263			175			90
Cumulative Amount of Net Liability Paid as of:
One year later		2,483		2,794		3,135		3,550		3,478		3,932			4,118			4,066			4,108			4,063
Two years later		4,079		4,699		5,499		5,911		6,161		6,616			6,896			6,789			6,565
Three years later		5,306		6,070		7,133		7,945		8,192		8,612			8,850			8,554
Four years later		6,196		7,137		8,564		9,396		9,689		10,048			10,089
Five years later		6,909		8,002		9,588		10,543		10,794		10,977
Six years later		7,453		8,765		10,366		11,353		11,530
Seven years later		8,009		9,305		10,950		11,915
Eight years later		8,402		9,714		11,390
Nine years later		8,697		10,046
Ten years later		8,944
Gross Liability, End of Year	$	11,435	$	11,904	$	15,515	$	16,713	$	17,948	$	20,292		$	22,482		$	22,293		$	22,623		$	22,367		$	22,839
Reinsurance Recoverable, End of Year		1,686		1,853		4,505		4,071		3,427		3,483			3,769			2,594			2,307			2,212			2,053
Net Liability, End of Year	$	9,749	$	10,051	$	11,010	$	12,642	$	14,521	$	16,809		$	18,713		$	19,699		$	20,316		$	20,155		$	20,786
Reestimated Gross Liability	$	13,455	$	15,221	$	19,697	$	20,074	$	19,580	$	19,769		$	20,335		$	19,969		$	20,735		$	21,489
Reestimated Reinsurance Recoverable		2,444		2,857		5,479		4,819		3,782		3,358			3,451			2,398			2,116			2,096
Reestimated Net Liability	$	11,011	$	12,364	$	14,218	$	15,255	$	15,798	$	16,411		$	16,884		$	17,571		$	18,619		$	19,393
Cumulative Gross Deficiency (Redundancy)	$	2,020	$	3,317	$	4,182	$	3,361	$	1,632	$	(523	)	$	(2,147	)	$	(2,324	)	$	(1,888	)	$	(878	)

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The subsequent development of the net liability for unpaid losses and loss adjustment expenses as of year-ends 1999 through 2003 was adversely affected by substantial unfavorable development related to asbestos and toxic waste claims. The cumulative net deficiencies experienced related to asbestos and toxic waste claims were the result of: (1) an increase in the actual number of claims filed; (2) an increase in the estimated number of potential claims; (3) an increase in the severity of actual and potential claims; (4) an increasingly adverse litigation environment; and (5) an increase in litigation costs associated with such claims. For the year 1999, the unfavorable development related to asbestos and toxic waste claims was offset in varying degrees by favorable loss experience in the professional liability classes, particularly directors and officers liability and fiduciary liability. For 2000, in addition to the unfavorable development related to asbestos and toxic waste claims, there was significant unfavorable development in the commercial casualty and workers’ compensation classes. For the years 2001 through 2003, in addition to the unfavorable development related to asbestos and toxic waste claims, there was significant unfavorable development in the professional liability classes — principally directors and officers liability and errors and omissions liability, due in large part to adverse loss trends related to corporate failures and allegations of management misconduct and accounting irregularities — and, to a lesser extent, commercial casualty and workers’ compensation classes. For the years 2004 through 2008, there was significant favorable development, primarily in the professional liability classes and more recently in the commercial casualty classes due to favorable loss trends in recent years and in the homeowners and commercial property classes due to lower than expected emergence of losses.

Conditions and trends that have affected development of the liability for unpaid losses and loss adjustment expenses in the past will not necessarily recur in the future. Accordingly, it is not appropriate to extrapolate future redundancies or deficiencies based on the data in this table.

The middle section of the table on page 7 shows the cumulative amount paid with respect to the reestimated net liability as of the end of each succeeding year. For example, in the 1999 column, as of December 31, 2009 the P&C Group had paid $8,944 million of the currently estimated $11,011 million of net losses and loss adjustment expenses that were unpaid at the end of 1999; thus, an estimated $2,067 million of net losses incurred on or before December 31, 1999 remain unpaid as of December 31, 2009, approximately 44% of which relates to asbestos and toxic waste claims.

The lower section of the table on page 7 shows the gross liability, reinsurance recoverable and net liability recorded at the balance sheet date for each of the indicated years and the reestimation of these amounts as of December 31, 2009.

The liability for unpaid losses and loss adjustment expenses, net of reinsurance recoverable, reported in the accompanying consolidated financial statements prepared in accordance with generally accepted accounting principles (GAAP) comprises the liabilities of U.S. and foreign members of the P&C Group as follows:

	December 31
	2009		2008
	(in millions)
U.S. subsidiaries	$	16,986	$	16,871
Foreign subsidiaries		3,800		3,284
	$	20,786	$	20,155

Members of the P&C Group are required to file annual statements with insurance regulatory authorities prepared on an accounting basis prescribed or permitted by such authorities (statutory basis). The difference between the liability for unpaid losses and loss expenses, net of reinsurance recoverable, reported in the statutory basis financial statements of the U.S. members of the P&C Group and such liability reported on a GAAP basis in the consolidated financial statements is not significant.

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  Investments

Investment decisions are centrally managed by investment professionals based on guidelines established by management and approved by the respective boards of directors for each company in the P&C Group.

Additional information about the Corporation’s investment portfolio as well as its approach to managing risks is presented in the Invested Assets section of MD&A, the Investment Portfolio section of Quantitative and Qualitative Disclosures About Market Risk and Note (4) of the Notes to Consolidated Financial Statements.

The investment results of the P&C Group for each of the past three years are shown in the following table.

	Average
	Invested		Investment		Percent Earned
Year	Assets(a)		Income(b)		Before Tax			After Tax
	(in millions)
2007	$	36,406	$	1,590		4.37	%		3.50	%
2008		37,190		1,622		4.36			3.49
2009		36,969		1,549		4.19			3.39

(a)  Average of amounts with fixed maturity securities at amortized cost, equity securities at fair value and other invested assets, which include private equity limited partnerships carried at the P&C Group’s equity in the net assets of the partnerships.

(b)  Investment income after deduction of investment expenses, but before applicable income tax.

Competition

The property and casualty insurance industry is highly competitive both as to price and service. Members of the P&C Group compete not only with other stock companies but also with mutual companies, other underwriting organizations and alternative risk sharing mechanisms. Some competitors produce their business at a lower cost through the use of salaried personnel rather than independent agents and brokers. Rates are not uniform among insurers and vary according to the types of insurers, product coverage and methods of operation. The P&C Group competes for business not only on the basis of price, but also on the basis of financial strength, availability of coverage desired by customers and quality of service, including claim adjustment service. The P&C Group’s products and services are generally designed to serve specific customer groups or needs and to offer a degree of customization that is of value to the insured. The P&C Group continues to work closely with its distribution network of agents and brokers as well as customers and to reinforce with them the stability, expertise and added value the P&C Group’s products provide.

There are approximately 2,400 property and casualty insurance companies in the United States operating independently or in groups and no single company or group is dominant across all lines of business or jurisdictions. However, the relatively large size and underwriting capacity of the P&C Group provide it opportunities not available to smaller companies.

Regulation and Premium Rates

Chubb is a holding company with subsidiaries primarily engaged in the property and casualty insurance business and is therefore subject to regulation by certain states as an insurance holding company. All states have enacted legislation that regulates insurance holding company systems such as the Corporation. This legislation generally provides that each insurance company in the system is required to register with the department of insurance of its state of domicile and furnish information concerning the operations of companies within the holding company system that may materially affect the operations, management or financial condition of the insurers within the system. All transactions within a holding company system affecting insurers must be fair and equitable. Notice to the insurance commissioners is required prior to the consummation of transactions affecting the ownership or control of an insurer and of certain material transactions between an insurer and any person in its holding company system and, in addition, certain of such transactions cannot be consummated without the commissioners’ prior approval.

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Companies within the P&C Group are subject to regulation and supervision in the respective states in which they do business. In general, such regulation is designed to protect the interests of policyholders, and not necessarily the interests of insurers, their shareholders and other investors. The extent of such regulation varies but generally has its source in statutes that delegate regulatory, supervisory and administrative powers to a department of insurance. The regulation, supervision and administration relate, among other things, to: the standards of solvency that must be met and maintained; the licensing of insurers and their agents; restrictions on insurance policy terminations; unfair trade practices; the nature of and limitations on investments; premium rates; restrictions on the size of risks that may be insured under a single policy; deposits of securities for the benefit of policyholders; approval of policy forms; periodic examinations of the affairs of insurance companies; annual and other reports required to be filed on the financial condition of companies or for other purposes; limitations on dividends to policyholders and shareholders; and the adequacy of provisions for unearned premiums, unpaid losses and loss adjustment expenses, both reported and unreported, and other liabilities.

The extent of insurance regulation on business outside the United States varies significantly among the countries in which the P&C Group operates. Some countries have minimal regulatory requirements, while others regulate insurers extensively. Foreign insurers in many countries are subject to greater restrictions than domestic competitors. In certain countries, the P&C Group has incorporated insurance subsidiaries locally to improve its competitive position.

The National Association of Insurance Commissioners (NAIC) has a risk-based capital requirement for property and casualty insurance companies. The risk-based capital formula is used by state regulatory authorities to identify insurance companies that may be undercapitalized and that merit further regulatory attention. The formula prescribes a series of risk measurements to determine a minimum capital amount for an insurance company, based on the profile of the individual company. The ratio of a company’s actual policyholders’ surplus to its minimum capital requirement will determine whether any state regulatory action is required. At December 31, 2009, each member of the P&C Group had more than sufficient capital to meet the risk-based capital requirement. The NAIC periodically reviews the risk-based capital formula and changes to the formula could be considered in the future.

Regulatory requirements applying to premium rates vary from state to state, but generally provide that rates cannot be excessive, inadequate or unfairly discriminatory. In many states, these regulatory requirements can impact the P&C Group’s ability to change rates, particularly with respect to personal lines products such as automobile and homeowners insurance, without prior regulatory approval. For example, in certain states there are measures that limit the use of catastrophe models or credit scoring as well as premium rate freezes or limitations on the ability to cancel or nonrenew certain policies, which can affect the P&C Group’s ability to charge adequate rates.

Subject to legislative and regulatory requirements, the P&C Group’s management determines the prices charged for its policies based on a variety of factors including loss and loss adjustment expense experience, inflation, anticipated changes in the legal environment, both judicial and legislative, and tax law and rate changes. Methods for arriving at prices vary by type of business, exposure assumed and size of risk. Underwriting profitability is affected by the accuracy of these assumptions, by the willingness of insurance regulators to approve changes in those rates that they control and by certain other matters, such as underwriting selectivity and expense control.

In all states, insurers authorized to transact certain classes of property and casualty insurance are required to become members of an insolvency fund. In the event of the insolvency of a licensed insurer writing a class of insurance covered by the fund in the state, companies in the P&C Group, together with the other fund members, are assessed in order to provide the funds necessary to pay certain claims against the insolvent insurer. Generally, fund assessments are proportionately based on the members’ written premiums for the classes of insurance written by the insolvent insurer. In certain states, the P&C Group can recover a portion of these assessments through premium tax offsets and policyholder surcharges. In 2009, assessments of the members of the P&C Group were insignificant. The amount of future assessments cannot be reasonably estimated.

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Insurance regulation in certain states requires the companies in the P&C Group, together with other insurers operating in the state, to participate in assigned risk plans, reinsurance facilities and joint underwriting associations, which are mechanisms that generally provide applicants with various basic insurance coverages when they are not available in voluntary markets. Such mechanisms are most prevalent for automobile and workers’ compensation insurance, but a majority of states also mandate that insurers, such as the P&C Group, participate in Fair Plans or Windstorm Plans, which offer basic property coverages to insureds where not otherwise available. Some states also require insurers to participate in facilities that provide homeowners, crime and other classes of insurance where periodic market constrictions may occur. Participation is based upon the amount of a company’s voluntary written premiums in a particular state for the classes of insurance involved. These involuntary market plans generally are underpriced and produce unprofitable underwriting results.

In several states, insurers, including members of the P&C Group, participate in market assistance plans. Typically, a market assistance plan is voluntary, of limited duration and operates under the supervision of the insurance commissioner to provide assistance to applicants unable to obtain commercial and personal liability and property insurance. The assistance may range from identifying sources where coverage may be obtained to pooling of risks among the participating insurers. A few states require insurers, including members of the P&C Group, to purchase reinsurance from a mandatory reinsurance fund.

Although the federal government and its regulatory agencies generally do not directly regulate the business of insurance, federal initiatives often have an impact on the business in a variety of ways. Current and proposed federal measures that may significantly affect the P&C Group’s business and the market as a whole include federal terrorism insurance, systemic risk regulation, tort reform, natural catastrophes, corporate governance, ergonomics, health care reform including the containment of medical costs, medical malpractice reform and patients’ rights, privacy, e-commerce, international trade, federal regulation of insurance companies and the taxation of insurance companies.

Companies in the P&C Group are also affected by a variety of state and federal legislative and regulatory measures as well as by decisions of their courts that define and extend the risks and benefits for which insurance is provided. These include: redefinitions of risk exposure in areas such as water damage, including mold, flood and storm surge; products liability and commercial general liability; credit scoring; and extension and protection of employee benefits, including workers’ compensation and disability benefits.

Legislative and judicial developments pertaining to asbestos and toxic waste exposures are discussed in the Property and Casualty Insurance — Loss Reserves section of MD&A.

Real Estate

The Corporation’s wholly owned subsidiary, Bellemead Development Corporation (Bellemead), and its subsidiaries were involved in commercial development activities primarily in New Jersey and residential development activities primarily in central Florida. The real estate operations are in run-off.

Chubb Financial Solutions

Chubb Financial Solutions (CFS) provided customized financial products, primarily derivative financial instruments, to corporate clients. CFS has been in run-off since 2003. Since that date, CFS has terminated early or run-off nearly all of its contractual obligations within its financial products portfolio. Additional information related to CFS’s operations is included in the Corporate and Other — Chubb Financial Solutions section of MD&A.

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Item 1A.   Risk Factors

The Corporation’s business is subject to a number of risks, including those described below, that could have a material effect on the Corporation’s results of operations, financial condition or liquidity and that could cause our operating results to vary significantly from period to period. References to “we,” “us” and “our” appearing in this Form 10-K should be read to refer to the Corporation.

If our property and casualty loss reserves are insufficient, our results could be adversely affected.

The process of establishing loss reserves is complex and imprecise because it must take into consideration many variables that are subject to the outcome of future events. As a result, informed subjective estimates and judgments as to our ultimate exposure to losses are an integral component of our loss reserving process. Variations between our loss reserve estimates and the actual emergence of losses could be material and could have a material adverse effect on our results of operations or financial condition.

A further discussion of the risk factors related to our property and casualty loss reserves is presented in the Property and Casualty Insurance — Loss Reserves section of MD&A.

The effects of emerging claim and coverage issues on our business are uncertain.

As industry practices and legal, judicial, social, environmental and other conditions change, unexpected or unintended issues related to claims and coverage may emerge. These issues may adversely affect our business by either extending coverage beyond our underwriting intent or by increasing the number or size of claims. In some instances, these issues may not become apparent for some time after we have written the insurance policies that are affected by such issues. As a result, the full extent of liability under our insurance policies may not be known for many years after the policies are issued. Emerging claim and coverage issues could have a material adverse effect on our results of operations or financial condition.

Catastrophe losses could materially and adversely affect our business.

As a property and casualty insurance holding company, our insurance operations expose us to claims arising out of catastrophes. Catastrophes can be caused by various natural perils, including hurricanes and other windstorms, earthquakes, severe winter weather and brush fires. Catastrophes can also be man-made, such as a terrorist attack. The frequency and severity of catastrophes are inherently unpredictable. It is possible that both the frequency and severity of natural and man-made catastrophic events will increase.

The extent of losses from a catastrophe is a function of both the total amount of exposure under our insurance policies in the area affected by the event and the severity of the event. Most catastrophes are restricted to relatively small geographic areas; however, hurricanes and earthquakes may produce significant damage over larger areas, especially those that are heavily populated. Natural or man-made catastrophic events could cause claims under our insurance policies to be higher than we anticipated and could cause substantial volatility in our financial results for any fiscal quarter or year. Our ability to write new business could also be affected. Increases in the value and geographic concentration of insured property and the effects of inflation could increase the severity of claims from catastrophic events in the future. In addition, states have from time to time passed legislation that has the effect of limiting the ability of insurers to manage catastrophe risk, such as legislation limiting insurers ability to increase rates and prohibiting insurers from withdrawing from catastrophe-exposed areas.

As a result of the foregoing, it is possible that the occurrence of any natural or man-made catastrophic event could have a material adverse effect on our business, results of operations, financial condition and liquidity. A further discussion of the risk factors related to catastrophes is presented in the Property and Casualty Insurance — Catastrophe Risk Management section of MD&A.

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We cannot predict the impact that changing climate conditions, including legal, regulatory and social responses thereto, may have on our business.

Various scientists, environmentalists, international organizations, regulators and other commentators believe that global climate change has added, and will continue to add, to the unpredictability, frequency and severity of natural disasters (including, but not limited to, hurricanes, tornadoes, freezes, other storms and fires) in certain parts of the world. In response to this belief, a number of legal and regulatory measures as well as social initiatives have been introduced in an effort to reduce greenhouse gas and other carbon emissions which may be chief contributors to global climate change.

We cannot predict the impact that changing climate conditions, if any, will have on our results of operations or our financial condition. Moreover, we cannot predict how legal, regulatory and social responses to concerns about global climate change will impact our business.

We may experience reduced returns or losses on our investments especially during periods of heightened volatility, which could have a material adverse effect on our results of operations or financial condition.

The returns on our investment portfolio may be reduced or we may incur losses as a result of changes in general economic conditions, interest rates, real estate markets, fixed income markets, equity markets, alternative investment markets, credit markets, exchange rates, global capital market conditions and numerous other factors that are beyond our control.

The worldwide financial markets experience high levels of volatility during certain periods, which could have an increasingly adverse impact on the U.S. and foreign economies. The financial market volatility and the resulting negative economic impact could continue and it is possible that it may be prolonged, which could adversely affect our current investment portfolio, make it difficult to determine the value of certain assets in our portfolio and/or make it difficult for us to purchase suitable investments that meet our risk and return criteria. These factors could cause us to realize less than expected returns on invested assets, sell investments for a loss or write off or write down investments, any of which could have a material adverse effect on our results of operations or financial condition.

A significant portion of our investment portfolio consists of tax exempt securities and we receive certain tax benefits relating to such securities based on current laws and regulations. Our portfolio has also benefited from certain other laws and regulations, including without limitation, tax credits (such as foreign tax credits). Federal and/or state tax legislation could be enacted that would lessen or eliminate some or all of the tax advantages currently benefiting us and could negatively impact the value of our investment portfolio.

We are exposed to credit risk in our business operations and in our investment portfolio.

We are exposed to credit risk in several areas of our business operations, including, without limitation, credit risk relating to reinsurance, co-sureties on surety bonds, policyholders of certain of our insurance products, independent agents and brokers, issuers of securities, insurers of certain securities and certain other counterparties relating to our investment portfolio.

With respect to reinsurance coverages that we have purchased, our ability to recover amounts due from reinsurers may be affected by the creditworthiness and willingness to pay of the reinsurers. Although certain reinsurance we have purchased is collateralized, the collateral is exposed to credit risk of the counterparty that has guaranteed an investment return on such collateral.

It is customary practice in the surety business for multiple insurers to participate as co-sureties on large surety bonds, meaning that each insurer (each referred to as a co-surety) assumes its proportionate share of the risk and receives a corresponding percentage of the bond premium. Under these arrangements, the co-sureties’ obligations are joint and several. Consequently, if a co-surety defaults on its obligations, the remaining co-surety or co-sureties are obligated to make up the shortfall to the beneficiary of the surety bond even though the non-defaulting co-sureties did not receive the premium for that portion of the risk. Therefore, we are subject to credit risk with respect to the insurers with whom we are co-sureties on surety bonds.

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In accordance with industry practice, when insureds purchase our insurance products through independent agents and brokers, they generally pay the premiums to the agent or broker, which in turn is required to remit the collected premium to us. In many jurisdictions, we are deemed to have received payment upon the receipt of the payment by the agent or broker, regardless of whether the agent or broker actually remits payment to us. As a result, we assume credit risk associated with amounts due from independent agents and brokers.

The value of our investment portfolio is subject to credit risk from the issuers and/or guarantors of the securities in the portfolio, other counterparties in certain transactions and, for certain securities, insurers that guarantee specific issuer’s obligations. Defaults by the issuer and, where applicable, an issuer’s guarantor, insurer or other counterparties with regard to any of such investments could reduce our net investment income and net realized investment gains or result in investment losses.

Our exposure to any of the above credit risks could have a material adverse effect on our results of operations or financial condition.

The failure of the risk mitigation strategies we utilize could have a material adverse effect on our financial condition or results of operations.

We utilize a number of strategies to mitigate our risk exposure, such as:

•  engaging in rigorous underwriting;

•  carefully evaluating terms and conditions of our policies;

•  focusing on our risk aggregations by geographic zones, industry type, credit exposure and other bases; and

•  ceding reinsurance.

However, there are inherent limitations in all of these tactics and no assurance can be given that an event or series of events will not result in loss levels in excess of our probable maximum loss models, which could have a material adverse effect on our financial condition or results of operations. It is also possible that losses could manifest themselves in ways that we do not anticipate and that our risk mitigation strategies are not designed to address. Such a manifestation of losses could have a material adverse effect on our financial condition or results of operations.

These risks may be heightened during difficult economic conditions such as those currently being experienced in the United States and elsewhere.

Reinsurance coverage may not be available to us in the future at commercially reasonable rates or at all.

The availability and cost of reinsurance are subject to prevailing market conditions that are beyond our control. No assurances can be made that reinsurance will remain continuously available to us in amounts that we consider sufficient and at rates that we consider acceptable, which would cause us to increase the amount of risk we retain, reduce the amount of business we underwrite or look for alternatives to reinsurance. This, in turn, could have a material adverse effect on our financial condition or results of operations.

Cyclicality of the property and casualty insurance industry may cause fluctuations in our results.

The property and casualty insurance business historically has been cyclical, experiencing periods characterized by intense price competition, relatively low premium rates and less restrictive underwriting standards followed by periods of relatively low levels of competition, high premium rates and more selective underwriting standards. We expect this cyclicality to continue. The periods of intense price competition in the cycle could adversely affect our financial condition, profitability or cash flows.

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A number of factors, including many that are volatile and unpredictable, can have a significant impact on cyclical trends in the property and casualty insurance industry and the industry’s profitability. These factors include:

•  an apparent trend of courts to grant increasingly larger awards for certain damages;

•  catastrophic hurricanes, windstorms, earthquakes and other natural disasters, as well as the occurrence of man-made disasters (e.g., a terrorist attack);

•  availability, price and terms of reinsurance;

•  fluctuations in interest rates;

•  changes in the investment environment that affect market prices of and income and returns on investments; and

•  inflationary pressures that may tend to affect the size of losses experienced by insurance companies.

We cannot predict whether or when market conditions will improve, remain constant or deteriorate. Negative market conditions may impair our ability to write insurance at rates that we consider appropriate relative to the risk assumed. If we cannot write insurance at appropriate rates, our ability to transact business would be materially and adversely affected.

Payment of obligations under surety bonds could adversely affect our future operating results.

The surety business tends to be characterized by infrequent but potentially high severity losses. The majority of our surety obligations are intended to be performance-based guarantees. When losses occur, they may be mitigated, at times, by recovery rights to the customer’s assets, contract payments, collateral and bankruptcy recoveries. We have substantial commercial and construction surety exposure for current and prior customers. In that regard, we have exposures related to surety bonds issued on behalf of companies that have experienced or may experience deterioration in creditworthiness. If the financial condition of these companies were adversely affected by the economy or otherwise, we may experience an increase in filed claims and may incur high severity losses, which could have a material adverse effect on our results of operations.

A downgrade in our credit ratings and financial strength ratings could adversely impact the competitive positions of our operating businesses.

Credit ratings and financial strength ratings can be important factors in establishing our competitive position in the insurance markets. There can be no assurance that our ratings will continue for any given period of time or that they will not be changed. If our credit ratings were downgraded in the future, we could incur higher borrowing costs and may have more limited means to access capital. In addition, a downgrade in our financial strength ratings could adversely affect the competitive position of our insurance operations, including a possible reduction in demand for our products in certain markets.

The inability of our insurance subsidiaries to pay dividends in sufficient amounts would harm our ability to meet our obligations and to pay future dividends.

As a holding company, Chubb relies primarily on dividends from its insurance subsidiaries to meet its obligations for payment of interest and principal on outstanding debt obligations and to pay dividends to shareholders. The ability of our insurance subsidiaries to pay dividends in the future will depend on their statutory surplus, on earnings and on regulatory restrictions. We are subject to regulation by some states as an insurance holding company system. Such regulation generally provides that transactions between companies within the holding company system must be fair and equitable. Transfers of assets among affiliated companies, certain dividend payments from insurance subsidiaries and certain material transactions between companies within the system may be subject to prior notice to, or prior approval by, state regulatory authorities. The ability of our insurance subsidiaries to pay dividends is also restricted by regulations that set standards of solvency that must be met and maintained, that limit investments and that limit dividends to shareholders. These regulations may affect Chubb’s insurance subsidiaries’ ability to provide Chubb with dividends.

15

Our businesses are heavily regulated, and changes in regulation may reduce our profitability and limit our growth.

Our insurance subsidiaries are subject to extensive regulation and supervision in the jurisdictions in which they conduct business. This regulation is generally designed to protect the interests of policyholders, and not necessarily the interests of insurers, their shareholders or other investors. The regulation relates to authorization for lines of business, capital and surplus requirements, investment limitations, underwriting limitations, transactions with affiliates, dividend limitations, changes in control, premium rates and a variety of other financial and nonfinancial components of an insurance company’s business.

Virtually all states in which we operate require us, together with other insurers licensed to do business in that state, to bear a portion of the loss suffered by some insureds as the result of impaired or insolvent insurance companies. In addition, in various states, our insurance subsidiaries must participate in mandatory arrangements to provide various types of insurance coverage to individuals or other entities that otherwise are unable to purchase that coverage from private insurers. A few states require us to purchase reinsurance from a mandatory reinsurance fund. Such reinsurance funds can create a credit risk for insurers if not adequately funded by the state and, in some cases, the existence of a reinsurance fund could affect the prices charged for our policies. The effect of these and similar arrangements could reduce our profitability in any given period or limit our ability to grow our business.

In recent years, the state insurance regulatory framework has come under increased scrutiny, including scrutiny by federal officials, and some state legislatures have considered or enacted laws that may alter or increase state authority to regulate insurance companies and insurance holding companies. Further, the NAIC and state insurance regulators are continually reexamining existing laws and regulations, specifically focusing on modifications to statutory accounting principles, interpretations of existing laws and the development of new laws and regulations. Any proposed or future legislation or NAIC initiatives, if adopted, may be more restrictive on our ability to conduct business than current regulatory requirements or may result in higher costs.

Although the federal government and its regulatory agencies generally do not directly regulate the business of insurance, federal initiatives often have an impact on the business in a variety of ways. Current and proposed federal measures that may significantly affect the P&C Group’s business and the market as a whole include federal terrorism insurance, systemic risk regulation, tort reform, natural catastrophes, corporate governance, ergonomics, health care reform including containment of medical costs, medical malpractice reform and patients’ rights, privacy, e-commerce, international trade, federal regulation of insurance companies and the taxation of insurance companies.

Intense competition for our products could harm our ability to maintain or increase our profitability and premium volume.

The property and casualty insurance industry is highly competitive. We compete not only with other stock companies but also with mutual companies, other underwriting organizations and alternative risk sharing mechanisms. We compete for business not only on the basis of price, but also on the basis of financial strength, availability of coverage desired by customers and quality of service, including claim adjustment service. We may have difficulty in continuing to compete successfully on any of these bases in the future.

If competition limits our ability to write new business at adequate rates, our results of operations could be adversely affected.

We are subject to a number of risks associated with our business outside the United States.

A significant portion of our business is conducted outside the United States, including in Asia, Australia, Canada, Europe and Latin America. By doing business outside the United States, we are subject to a number of risks, including without limitation, dealing with jurisdictions, especially in emerging markets, that may lack political, financial or social stability and/or a strong legal and regulatory

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framework, which may make it difficult to do business and comply with local laws and regulations in such jurisdictions. Failure to comply with local laws in a particular jurisdiction or doing business in a country that becomes increasingly unstable could have a significant adverse effect on our business and operations in that market as well as on our reputation generally.

As part of our international operations, we engage in transactions denominated in a currency other than the United States dollar. To reduce our exposure to currency fluctuation, we attempt to match the currency of the liabilities we incur under insurance policies with assets denominated in the same local currency. However, in the event that we underestimate our exposure, negative movements in the United States dollar versus the local currency will exacerbate the impact of the exposure on our results of operations and financial condition.

We report the results of our international operations on a consolidated basis with our domestic business. These results are reported in United States dollars. A significant portion of the business we write outside the United States, however, is transacted in local currencies. Consequently, fluctuations in the relative value of local currencies in which the policies are written versus the United States dollar can mask the underlying trends in our international business.

We are dependent on a distribution network comprised of independent insurance brokers and agents to distribute our products.

We generally do not use salaried employees to promote or distribute our insurance products. Instead, we rely on a large number of independent insurance brokers and agents. Accordingly, our business is dependent on the willingness of these brokers and agents to recommend our products to their customers. Deterioration in relationships with our broker and agent distribution network could materially and adversely affect our ability to sell our products, which, in turn, could have a material adverse effect on our results of operations or financial condition.

If we experience difficulties with outsourcing relationships, our ability to conduct our business might be negatively impacted.

We outsource certain business and administrative functions to third parties and may do so increasingly in the future. If we fail to develop and implement our outsourcing strategies or our third party providers fail to perform as anticipated, we may experience operational difficulties, increased costs and a loss of business that may have a material adverse effect on our results of operations or financial condition. By outsourcing certain business and administrative functions to third parties, we may be exposed to enhanced risk of data security breaches. Any breach of data security could damage our reputation and/or result in monetary damages, which, in turn, could have a material adverse effect on our results of operations or financial condition.

The occurrence of certain catastrophic events could have a materially adverse effect on our systems and could impact our ability to conduct business effectively.

Our computer, information technology and telecommunications systems, which we use to conduct our business, interface with and rely upon third-party systems. Systems failures or outages could compromise our ability to perform business functions in a timely manner, which could harm our ability to conduct business and hurt our relationships with our business partners and customers. In the event of a disaster such as a natural catastrophe, an industrial accident, a blackout, a computer virus, a terrorist attack or war, our systems may be inaccessible to our employees, customers or business partners for an extended period of time. Even if our employees or third party providers are able to report to work, they might be unable to perform their duties for an extended period of time if our computer, information technology or telecommunication systems were disabled or destroyed. Our systems could also be subject to physical break-ins, electronic hacking, and subject to similar disruptions from unauthorized tampering. This may impede or interrupt our business operations, which could have a material adverse effect on our results of operations or financial condition.

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Item 1B.  Unresolved Staff Comments

None.

Item 2.  Properties

The executive offices of the Corporation are in Warren, New Jersey. The administrative offices of the P&C Group are located in Warren and Whitehouse Station, New Jersey. The P&C Group maintains territory, branch and service offices in major cities throughout the United States and also has offices in Canada, Europe, Australia, Latin America and Asia. Office facilities are leased with the exception of buildings in Whitehouse Station, New Jersey and Simsbury, Connecticut. Management considers its office facilities suitable and adequate for the current level of operations.

Item 3.  Legal Proceedings

As previously disclosed, Chubb and certain of its subsidiaries have been involved in the investigations by various Attorneys General and other regulatory authorities of several states, the U.S. Securities and Exchange Commission, the U.S. Attorney for the Southern District of New York and certain non-U.S. regulatory authorities with respect to certain business practices in the property and casualty insurance industry including (1) potential conflicts of interest and anti-competitive behavior arising from the payment of contingent commissions to brokers and agents and (2) loss mitigation and finite reinsurance arrangements. In connection with these investigations, Chubb and certain of its subsidiaries received subpoenas and other requests for information from various regulators. The Corporation has cooperated fully with these investigations. The Corporation has settled with several state Attorneys General and insurance departments all issues arising out of their investigations. As described in more detail below, the Attorney General of Ohio in August 2007 filed an action against Chubb and certain of its subsidiaries, as well as several other insurers and one broker, as a result of the Ohio Attorney General’s business practices investigation. Although no other Attorney General or regulator has initiated an action against the Corporation, it is possible that such an action may be brought against the Corporation with respect to some or all of the issues that were the focus of the business practice investigations.

The Attorney General of Ohio on August 24, 2007 filed an action in the Court of Common Pleas in Cuyahoga County, Ohio, against Chubb and certain of its subsidiaries, as well as several other insurers and one broker, as a result of the Ohio Attorney General’s business practices investigation. This action alleges violations of Ohio’s antitrust laws. In July 2008, the court denied the Corporation’s and the other defendants’ motions to dismiss the Attorney General’s complaint. In August 2008, the Corporation and the other defendants filed answers to the complaint and discovery is proceeding.

As previously disclosed, individual actions and purported class actions arising out of the investigations into the payment of contingent commissions to brokers and agents have been filed in a number of federal and state courts. On August 1, 2005, Chubb and certain of its subsidiaries were named in a putative class action entitled In re Insurance Brokerage Antitrust Litigation in the U.S. District Court for the District of New Jersey (N.J. District Court). This action, brought against several brokers and insurers on behalf of a class of persons who purchased insurance through the broker defendants, asserts claims under the Sherman Act and state law and the Racketeer Influenced and Corrupt Organizations Act (RICO) arising from the alleged unlawful use of contingent commission agreements. On September 28, 2007, the N.J. District Court dismissed the second amended complaint filed by the plaintiffs in the In re Insurance Brokerage Antitrust Litigation in its entirety. In so doing, the court dismissed the plaintiffs’ Sherman Act and RICO claims with prejudice for failure to state a claim, and it dismissed the plaintiffs’ state law claims without prejudice because it declined to exercise supplemental jurisdiction over them. The plaintiffs have appealed the dismissal of their second amended complaint to the U.S. Court of Appeals for the Third Circuit, and that appeal is currently pending.

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As previously disclosed, Chubb and certain of its subsidiaries also have been named as defendants in other putative class actions relating or similar to the In re Insurance Brokerage Antitrust Litigation that have been filed in various state courts or in U.S. district courts between 2005 and 2007. These actions have been subsequently removed and ultimately transferred to the N.J. District Court for consolidation with the In re Insurance Brokerage Antitrust Litigation. These actions are currently stayed.

In the various actions described above, the plaintiffs generally allege that the defendants unlawfully used contingent commission agreements and conspired to reduce competition in the insurance markets. The actions seek treble damages, injunctive and declaratory relief, and attorneys’ fees. The Corporation believes it has substantial defenses to all of the aforementioned legal proceedings and intends to defend the actions vigorously.

Information regarding certain litigation to which the P&C Group is a party is included in the Property and Casualty Insurance — Loss Reserves section of MD&A.

Chubb and its subsidiaries are also defendants in various lawsuits arising out of their businesses. It is the opinion of management that the final outcome of these matters will not have a material adverse effect on the Corporation’s results of operations or financial condition.

Item 4.  Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of the shareholders during the quarter ended December 31, 2009.

Executive Officers of the Registrant

			Year of
	Age(a)		Election(b)
John D. Finnegan, Chairman, President and Chief Executive Officer		61		2002
W. Brian Barnes, Senior Vice President and Chief Actuary of Chubb & Son, a division of Federal		47		2008
Maureen A. Brundage, Executive Vice President and General Counsel		53		2005
Robert C. Cox, Executive Vice President of Chubb & Son, a division of Federal		52		2003
John J. Degnan, Vice Chairman and Chief Operating Officer		65		1994
John J. Kennedy, Senior Vice President and Chief Accounting Officer		54		2008
Paul J. Krump, Executive Vice President and Chief Underwriting Officer of Chubb & Son, a division of Federal		50		2001
Andrew A. McElwee, Jr., Executive Vice President of Chubb & Son, a division of Federal		55		1997
Harold L. Morrison, Jr., Executive Vice President and Chief Global Field Officer of Chubb & Son, a division of Federal		52		2008
Steven R. Pozzi, Executive Vice President of Chubb & Son, a division of Federal		53		2009
Dino E. Robusto, Executive Vice President and Chief Administrative Officer of Chubb & Son, a division of Federal		51		2006
Richard G. Spiro, Executive Vice President and Chief Financial Officer		45		2008

(a) Ages listed above are as of April 28, 2010.

(b) Date indicates year first elected or designated as an executive officer.

All of the foregoing officers serve at the pleasure of the Board of Directors of the Corporation and have been employees of the Corporation for more than five years except for Ms. Brundage and Mr. Spiro.

Before joining the Corporation in 2005, Ms. Brundage was a partner in the law firm of White & Case LLP, where she headed the securities practice in New York and co-chaired its global securities practice.

Before joining the Corporation in 2008, Mr. Spiro was an investment banker at Citigroup Global Markets Inc., where he served as a Managing Director in Citigroup’s financial institutions investment banking group.

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PART II.

Item 5.   Market for the Registrant’s Common Stock and Related Stockholder Matters

The common stock of Chubb is listed and principally traded on the New York Stock Exchange (NYSE) under the trading symbol “CB”. The following are the high and low closing sale prices as reported on the NYSE Composite Tape and the quarterly dividends declared per share for each quarter of 2009 and 2008.

	2009
	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
Common stock prices
High	$	50.32	$	44.04	$	51.00	$	53.79
Low		35.00		38.11		38.82		48.06
Dividends declared		.35		.35		.35		.35

	2008
	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
Common stock prices
High	$	54.38	$	54.65	$	64.50	$	53.06
Low		48.02		49.01		45.61		38.75
Dividends declared		.33		.33		.33		.33

At February 12, 2010, there were approximately 8,700 common shareholders of record.

The declaration and payment of future dividends to Chubb’s shareholders will be at the discretion of Chubb’s Board of Directors and will depend upon many factors, including the Corporation’s operating results, financial condition and capital requirements, and the impact of regulatory constraints discussed in Note (18)(e) of the Notes to Consolidated Financial Statements.

The following table summarizes the stock repurchased by Chubb during each month in the quarter ended December 31, 2009.

					Total Number of		Maximum Number of
	Total				Shares Purchased as		Shares that May Yet Be
	Number of				Part of Publicly		Purchased Under
	Shares		Average Price		Announced Plans or		the Plans or
Period	Purchased(a)		Paid Per Share		Programs		Programs(b)
October 2009		3,678,000	$	50.21		3,678,000		3,324,869
November 2009		3,211,100		49.92		3,211,100		113,769
December 2009		2,953,644		48.66		2,953,644		22,160,125
Total		9,842,744		49.65		9,842,744

(a)  The stated amounts exclude 320 shares, 332 shares and 5,814 shares delivered to Chubb during the months of October 2009, November 2009 and December 2009, respectively, by employees of the Corporation to cover option exercise prices and withholding taxes in connection with the Corporation’s stock-based compensation plans.

(b)  On December 4, 2008, the Board of Directors authorized the repurchase of up to 20,000,000 shares of common stock. No shares remain under this share repurchase authorization. On December 3, 2009, the Board of Directors authorized the repurchase of up to 25,000,000 additional shares of common stock. The authorization has no expiration date.

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Stock Performance Graph

The following performance graph compares the performance of Chubb’s common stock during the five-year period from December 31, 2004 through December 31, 2009 with the performance of the Standard & Poor’s 500 Index and the Standard & Poor’s Property & Casualty Insurance Index. The graph plots the changes in value of an initial $100 investment over the indicated time periods, assuming all dividends are reinvested.

Cumulative Total Return

Based upon an initial investment of $100 on December 31, 2004
with dividends reinvested

	December 31
	2004		2005		2006		2007		2008		2009
Chubb	$	100	$	130	$	143	$	151	$	145	$	144
S&P 500		100		105		121		128		81		102
S&P 500 Property & Casualty Insurance		100		115		130		112		79		89

Our filings with the Securities and Exchange Commission (SEC) may incorporate information by reference, including this Form 10-K. Unless we specifically state otherwise, the information under this heading “Stock Performance Graph” shall not be deemed to be “soliciting materials” and shall not be deemed to be “filed” with the SEC or incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

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Item 6.  Selected Financial Data

	2009			2008			2007			2006			2005
	(in millions except for per share amounts)
FOR THE YEAR
Revenues
Property and Casualty Insurance
Premiums Earned	$	11,331		$	11,828		$	11,946		$	11,958		$	12,176
Investment Income		1,585			1,652			1,622			1,485			1,342
Other Revenues		2			4			11			—			—
Corporate and Other		75			108			154			315			181
Realized Investment Gains (Losses), Net		23			(371	)		374			245			384
Total Revenues	$	13,016		$	13,221		$	14,107		$	14,003		$	14,083
Income
Property and Casualty Insurance
Underwriting Income	$	1,631		$	1,361		$	2,116		$	1,905		$	921	(a)
Investment Income		1,549			1,622			1,590			1,454			1,315
Other Income (Charges)		(3	)		9			6			10			(1	)
Property and Casualty Insurance Income		3,177			2,992			3,712			3,369			2,235
Corporate and Other		(238	)		(214	)		(149	)		(89	)		(172	)
Realized Investment Gains (Losses), Net		23			(371	)		374			245			384
Income Before Income Tax		2,962			2,407			3,937			3,525			2,447
Federal and Foreign Income Tax		779			603			1,130			997			621
Net Income	$	2,183		$	1,804		$	2,807		$	2,528		$	1,826
Per Share
Net Income	$	6.18		$	4.92		$	7.01		$	5.98		$	4.47
Dividends Declared on Common Stock		1.40			1.32			1.16			1.00			.86
AT DECEMBER 31
Total Assets	$	50,449		$	48,429		$	50,574		$	50,277		$	48,061
Long Term Debt		3,975			3,975			3,460			2,466			2,467
Total Shareholders’ Equity		15,634			13,432			14,445			13,863			12,407
Book Value Per Share		47.09			38.13			38.56			33.71			29.68

(a)  Underwriting income in 2005 reflected net costs of $462 million ($300 million after-tax or $0.74 per share) related to Hurricane Katrina.

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Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations addresses the financial condition of the Corporation as of December 31, 2009 compared with December 31, 2008 and the results of operations for each of the three years in the period ended December 31, 2009. This discussion should be read in conjunction with the consolidated financial statements and related notes and the other information contained in this report.

INDEX

	PAGE
Cautionary Statement Regarding Forward-Looking Information		24
Critical Accounting Estimates and Judgments		26
Overview		26
Property and Casualty Insurance		28
Underwriting Operations		28
Underwriting Results		28
Net Premiums Written		28
Reinsurance Ceded		30
Profitability		31
Review of Underwriting Results by Business Unit		33
Personal Insurance		33
Commercial Insurance		34
Specialty Insurance		36
Reinsurance Assumed		37
Catastrophe Risk Management		37
Natural Catastrophes		38
Terrorism Risk and Legislation		38
Loss Reserves		39
Estimates and Uncertainties		41
Reserves Other than Those Relating to Asbestos and Toxic Waste Claims		41
Reserves Relating to Asbestos and Toxic Waste Claims		45
Asbestos Reserves		45
Toxic Waste Reserves		48
Reinsurance Recoverable		49
Prior Year Loss Development		50
Investment Results		53
Other Income and Charges		54
Corporate and Other		54
Chubb Financial Solutions		54
Realized Investment Gains and Losses		55
Capital Resources and Liquidity		56
Capital Resources		56
Ratings		57
Liquidity		58
Contractual Obligations and Off-Balance Sheet Arrangements		59
Invested Assets		60
Fair Values of Financial Instruments		61
Pension and Other Postretirement Benefits		62

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this document are “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995 (PSLRA). These forward-looking statements are made pursuant to the safe harbor provisions of the PSLRA and include statements regarding our loss reserve and reinsurance recoverable estimates; the impact of future catastrophes (including acts of terrorism); asbestos and toxic waste liability developments; the number and severity of surety-related claims; the impact of changes to our reinsurance program in 2009 and the cost of reinsurance in 2010; the adequacy of the rates at which we renewed and wrote new business; premium volume and competition in 2010; property and casualty investment income during 2010; cash flows generated by our fixed income investments; currency rate fluctuations; estimates with respect to our credit derivatives exposure; the repurchase of common stock under our share repurchase program; our capital adequacy and funding of liquidity needs; the funding and timing of loss payments; and the redemption of our capital securities. Forward-looking statements are made based upon management’s current expectations and beliefs concerning trends and future developments and their potential effects on us. 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 our 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 loss reserves, including:

•  our expectations relating to reinsurance recoverables;

•  the willingness of parties, including us, to settle disputes;

•  developments in judicial decisions or regulatory or legislative actions relating to coverage and liability, in particular, for asbestos, toxic waste and other mass tort claims;

•  development of new theories of liability;

•  our estimates relating to ultimate asbestos liabilities;

•  the impact from the bankruptcy protection sought by various asbestos producers and other related businesses; and

•  the effects of proposed asbestos liability legislation, including the impact of claims patterns arising from the possibility of legislation and those that may arise if legislation is not passed;

•  the availability and cost of reinsurance coverage;

•  the occurrence of significant weather-related or other natural or human-made disasters, particularly in locations where we have concentrations of risk;

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•  the impact of economic factors on companies on whose behalf we have issued surety bonds, and in particular, on those companies that file for bankruptcy or otherwise experience deterioration in creditworthiness;

•  the effects of disclosures by, and investigations of, companies relating to possible accounting irregularities, practices in the financial services industry, investment losses or other corporate governance issues, including:

•  claims and litigation arising out of stock option “backdating,” spring loading” and other equity grant practices by public companies;

•  the effects on the capital markets and the markets for directors and officers and errors and omissions insurance;

•  claims and litigation arising out of actual or alleged accounting or other corporate malfeasance by other companies;

•  claims and litigation arising out of practices in the financial services industry;

•  claims and litigation relating to uncertainty in the credit and broader financial markets; and

•  legislative or regulatory proposals or changes;

•  the effects of changes in market practices in the U.S. property and casualty insurance industry arising from any legal or regulatory proceedings, related settlements and industry reform, including changes that have been announced and changes that may occur in the future;

•  the impact of legislative and regulatory developments on our business, including those relating to terrorism, catastrophes and the financial markets;

•  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; and

•  our ability to implement management’s strategic plans and initiatives.

Chubb assumes no obligation to update any forward-looking information set forth in this document, which speak as of the date hereof.

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CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The consolidated financial statements include amounts based on informed estimates and judgments of management for transactions that are not yet complete. Such estimates and judgments affect the reported amounts in the financial statements. Those estimates and judgments that were most critical to the preparation of the financial statements involved the determination of loss reserves and the recoverability of related reinsurance recoverables and the evaluation of whether a decline in value of any investment is temporary or other-than-temporary. These estimates and judgments, which are discussed within the following analysis of our results of operations, require the use of assumptions about matters that are highly uncertain and therefore are subject to change as facts and circumstances develop. If different estimates and judgments had been applied, materially different amounts might have been reported in the financial statements.

OVERVIEW

The following highlights do not address all of the matters covered in the other sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations or contain all of the information that may be important to Chubb’s shareholders or the investing public. This overview should be read in conjunction with the other sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

•  Net income was $2.2 billion in 2009 compared with $1.8 billion in 2008 and $2.8 billion in 2007. The increase in net income in 2009 compared with 2008 was due to higher operating income in 2009 and modest net realized investment gains in 2009 compared with substantial net realized investment losses in 2008. We define operating income as net income excluding realized investment gains and losses after tax. The decrease in net income in 2008 compared with 2007 was due to both a significant decline in operating income and substantial realized investment losses in 2008 compared with substantial realized investments gains in 2007.

•  Operating income was $2.2 billion in 2009, $2.0 billion in 2008 and $2.6 billion in 2007. Higher operating income in 2009 compared with that in 2008 was due to higher underwriting income in our property and casualty insurance business offset in part by lower investment income. The lower operating income in 2008 compared with that in 2007 was due primarily to substantially lower underwriting income in our property and casualty insurance business in 2008 than in 2007. Management uses operating income, a non-GAAP financial measure, among other measures, to evaluate its performance because the realization of investment gains and losses in any period could be discretionary as to timing and can fluctuate significantly, which could distort the analysis of operating trends.

•  Underwriting results were highly profitable in 2009, 2008 and 2007. Our combined loss and expense ratio was 86.0% in 2009 compared with 88.7% in 2008 and 82.9% in 2007. The more profitable results in 2009 compared to 2008 were due to substantially lower catastrophe losses offset in part by a lower amount of favorable prior year loss development. The less profitable results in 2008 compared to 2007 were due in large part to higher catastrophe losses as well as the cumulative impact of the rate reductions experienced in the commercial and professional liability classes over the past several years. The impact of catastrophes accounted for 0.8 of a percentage point of the combined ratio in 2009 compared with 5.1 percentage points in 2008 and 3.0 percentage points in 2007.

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•  During 2009, we experienced overall favorable development of $762 million on loss reserves established as of the previous year end, due primarily to favorable loss experience in certain professional liability and commercial liability classes as well as lower than expected emergence of losses in the homeowners and commercial property classes. During 2008, we experienced overall favorable development of $873 million due primarily to favorable loss trends in certain professional liability and commercial liability classes, as well as lower than expected emergence of losses in the homeowners and commercial property classes. During 2007, we experienced overall favorable development of $697 million due primarily to favorable loss trends in the professional liability classes, lower than expected emergence of losses in the homeowners and commercial property classes and better than expected reported loss activity in the run-off of our reinsurance assumed business.

•  Total net premiums written decreased by 6% in 2009 and 1% in 2008. The decrease in 2009 was largely attributable to the general downturn in the economy and, to a lesser extent, the impact of currency fluctuation on business written outside the United States due to the strengthening of the U.S. dollar in 2009 compared to 2008. The lack of premium growth in both years also reflects our continued emphasis on underwriting discipline in a highly competitive market environment. Net premiums written in the United States decreased by 6% in 2009 and 2% in 2008. Net premiums written outside the United States decreased by 6% in 2009 and increased by 6% in 2008. Measured in local currencies, premiums outside the United States grew modestly in both years.

•  Property and casualty investment income after tax decreased by 3% in 2009 and increased by 2% in 2008. The decline in 2009 was due to lower yields, particularly on short term investments, as well as the effects of currency fluctuation on income from our non-U.S. investments. The growth in 2008 was limited as average invested assets increased only modestly during the year. Management uses property and casualty investment income after-tax, a non-GAAP financial measure, to evaluate its investment performance because it reflects the impact of any change in the proportion of the investment portfolio invested in tax exempt securities and is therefore more meaningful for analysis purposes than investment income before income tax.

•  Net realized investment gains before taxes were $23 million ($15 million after tax) in 2009 compared with net realized losses before taxes of $371 million ($241 million after tax) in 2008 and net realized gains before taxes of $374 million ($243 million after tax) in 2007. The net realized losses in 2008 were primarily attributable to other-than-temporary impairment losses on equity securities. The net realized gains in 2007 were primarily attributable to gains from investments in limited partnerships.

A summary of our consolidated net income is as follows:

	Years Ended December 31
	2009			2008			2007
	(in millions)
Property and casualty insurance	$	3,177		$	2,992		$	3,712
Corporate and other		(238	)		(214	)		(149	)
Consolidated operating income before income tax		2,939			2,778			3,563
Federal and foreign income tax		771			733			999
Consolidated operating income		2,168			2,045			2,564
Realized investment gains (losses) after income tax		15			(241	)		243
Consolidated net income	$	2,183		$	1,804		$	2,807

27

PROPERTY AND CASUALTY INSURANCE

A summary of the results of operations of our property and casualty insurance business is as follows:

	Years Ended December 31
	2009			2008			2007
	(in millions)
Underwriting
Net premiums written	$	11,077		$	11,782		$	11,872
Decrease in unearned premiums		254			46			74
Premiums earned		11,331			11,828			11,946
Losses and loss expenses		6,268			6,898			6,299
Operating costs and expenses		3,377			3,546			3,564
Decrease (increase) in deferred policy acquisition costs		27			(17	)		(52	)
Dividends to policyholders		28			40			19
Underwriting income		1,631			1,361			2,116
Investments
Investment income before expenses		1,585			1,652			1,622
Investment expenses		36			30			32
Investment income		1,549			1,622			1,590
Other income (charges)		(3	)		9			6
Property and casualty income before tax	$	3,177		$	2,992		$	3,712
Property and casualty investment income after tax	$	1,252		$	1,297		$	1,273

Property and casualty income before tax in 2009 was higher than in 2008 due to higher underwriting income, offset in part by lower investment income. The increase in underwriting income in 2009 was primarily due to substantially lower catastrophe losses, offset in part by a lower amount of favorable prior year loss development and a slight reduction in underwriting profitability excluding catastrophes in the current accident year. The decrease in investment income in 2009 was due to lower yields, particularly on short term investments, as well as the effects of currency fluctuation on income from our non-U.S. investments. Property and casualty income before tax in 2008 was lower than in 2007 due to substantially lower underwriting income. The decrease in underwriting income in 2008 was due in large part to higher catastrophe losses and the cumulative impact of the rate reductions in the commercial and specialty insurance businesses over the past several years.

The profitability of our property and casualty insurance business depends on the results of both our underwriting and investment operations. We view these as two distinct operations since the underwriting functions are managed separately from the investment function. Accordingly, in assessing our performance, we evaluate underwriting results separately from investment results.

Underwriting Operations

Underwriting Results

We evaluate the underwriting results of our property and casualty insurance business in the aggregate and also for each of our separate business units.

Net Premiums Written

Net premiums written amounted to $11.1 billion in 2009, a decrease of 6% compared with 2008. Net premiums written in 2008 decreased by 1% compared with 2007.

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Net premiums written by business unit were as follows:

	Years Ended December 31
								% Increase
			% Decrease					(Decrease)
	2009		2009 vs. 2008			2008		2008 vs. 2007			2007
	(dollars in millions)
Personal insurance	$	3,657		(4	)%	$	3,826		3	%	$	3,709
Commercial insurance		4,660		(7	)		4,993		(2	)		5,083
Specialty insurance		2,739		(6	)		2,899		(2	)		2,944
Total insurance		11,056		(6	)		11,718		—			11,736
Reinsurance assumed		21		(67	)		64		(53	)		136
Total	$	11,077		(6	)	$	11,782		(1	)	$	11,872

Net premiums written decreased by 6% in 2009 compared with 2008 and 1% in 2008 compared with 2007. Premiums in the United States, which represent about 75% of our total net premiums, decreased by 6% in 2009 and 2% in 2008. Premiums outside the U.S., expressed in U.S. dollars, decreased by 6% in 2009 and increased by 6% in 2008. In 2009, the decrease in net premiums written outside the U.S. was attributable to the impact of currency fluctuation due to the strengthening of the U.S. dollar. Conversely, in 2008, approximately half of the premium growth outside the U.S. was due to the impact of currency fluctuation due to the weakness of the U.S. dollar. In 2009 and 2008, net premiums written outside the U.S. grew modestly when measured in local currencies.

Premium growth was adversely impacted in 2009 and 2008, but more so in 2009, by the general downturn in the economy which began in 2008 and continued throughout 2009. The amounts of coverage purchased or the insured exposures, both of which are bases upon which we calculate the premiums we charge, were down in 2009 in many classes of our business. Also, in both years, our ability to grow premiums was constrained by our continued emphasis on underwriting discipline in a highly competitive market environment. During 2008, rates were under competitive pressure and generally decreased, with variation by class of business and geographic area. In 2009, competitive pressures continued but rates in the commercial and professional liability businesses increased slightly overall.

In both years, we retained a high percentage of our existing customers and renewed these accounts at what we believe are acceptable rates relative to the risks. While we found opportunities to write new business at acceptable rates, we continued to be disciplined and the number of such opportunities declined throughout 2008 and 2009. During the second half of 2008, the property and casualty insurance market experienced disruption as a result of broader issues in the financial markets and the economies of the United States and other countries. The crisis in the financial markets had an adverse impact on some of our competitors, resulting in opportunities for us to write new business. During 2009, we were able to write some new business due to this dislocation in the insurance markets. The modestly positive effect of this was offset by the decrease in demand in nearly all classes of our insurance business caused by the general downturn in the economy.

The highly competitive market is likely to continue in 2010. Although there have been some signs that an economic recovery may be underway, it remains uncertain if such recovery will occur and whether it will be sustained. Even if an economic recovery does occur, premium growth will lag any recovery that takes place. We expect net written premiums, excluding the impact of currency fluctuation, will be modestly lower in 2010 compared with 2009. If the average foreign currency to U.S. dollar exchange rates in 2010 are similar to 2009 year-end levels, we expect net premiums written will be flat to modestly lower in 2010 compared to 2009.

Reinsurance assumed net premiums written decreased by 67% in 2009 and 53% in 2008. The significant premium decline reflects the sale of our ongoing reinsurance assumed business in December 2005, which is discussed below.

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Reinsurance Ceded

Our premiums written are net of amounts ceded to reinsurers who assume a portion of the risk under the insurance policies we write that are subject to the reinsurance. Most of our ceded reinsurance arrangements consist of excess of loss and catastrophe contracts that protect against a specified part or all of certain types of losses over stipulated amounts arising from any one occurrence or event. Therefore, unless we incur losses that exceed our initial retention under these contracts, we do not receive any loss recoveries. As a result, in certain years, we cede premiums to reinsurance companies and receive few, if any, loss recoveries. However, in a year in which there is a significant catastrophic event or a series of large individual losses, we may receive substantial loss recoveries. The impact of ceded reinsurance on net premiums written and earned and on net losses and loss expenses incurred for the three years ended December 31, 2009 is presented in Note (10) of the Notes to Consolidated Financial Statements.

The most significant component of our ceded reinsurance program is property reinsurance. We purchase two types of coverage: catastrophe and property per risk.

For property risks in the United States and Canada, we purchase catastrophe reinsurance in two forms. We purchase a traditional catastrophe reinsurance treaty which we refer to as our North American catastrophe treaty. In recent years, we have also arranged for the purchase of multi-year, collateralized reinsurance coverage funded through the issuance of collateralized risk linked securities, known as catastrophe bonds.

Our North American catastrophe treaty has been in place for many years. For the 2009 treaty, our initial retention is $500 million per occurrence. We did not renew the coverage for 45% of covered losses between $350 million and $500 million we had under the 2008 treaty. We also converted a northeastern United States-only layer into a layer that covers all of the United States and Canada. The overall impact of these changes was to slightly reduce the maximum amount that we can recover per occurrence under the North American catastrophe treaty.

The combination of the 2009 North American catastrophe treaty and a portion of the catastrophe bond coverages in effect during 2009, collectively, provide coverage for United States and Canadian exposures of approximately 72% of losses (net of recoveries from other available reinsurance) between $500 million and $1.15 billion and 60% of losses between $1.15 billion and $1.65 billion.

We currently have three catastrophe bond coverages in effect. The first of the catastrophe bond coverages, which we established in 2007, is a $250 million, four-year reinsurance arrangement that provides coverage for homeowners-related hurricane losses in the northeastern part of the United States, where we have our greatest concentration of catastrophe exposure. The second of the catastrophe bond coverages, which we established in 2008, is a $200 million, three-year reinsurance arrangement that provides coverage for homeowners and commercial exposures. The full $200 million of coverage is available for loss events in the northeastern part of the United States. For losses occurring elsewhere in the continental United States or Canada, the coverage is limited to $55 million. Our third catastrophe bond coverage, which we established in 2009, is a $150 million, three-year reinsurance arrangement that provides coverage for homeowners-related hurricane losses in Florida.

For catastrophe events in the northeastern part of the United States, in addition to the United States and Canadian coverage discussed above, we have reinsurance that covers approximately 35% of losses (net of recoveries from other available reinsurance) between $1.15 billion and $2.05 billion. This coverage is provided through a combination of our North American catastrophe reinsurance treaty and the catastrophe bond coverage that we established in 2008. Additionally, the catastrophe bond coverage established in 2007 provides coverage for approximately 30% of homeowners-related hurricane losses between $1.45 billion and $2.25 billion.

For hurricane events in Florida, we have a combination of reinsurance coverages that operate in conjunction with the United States and Canadian coverage discussed above. We have reinsurance from the Florida Hurricane Catastrophe Fund (FHCF), which is a state-mandated fund designed to reimburse insurers for a portion of their residential catastrophic hurricane losses. Coverage under this program,

30

which renews annually, expires June 1, 2010. Our participation in this program currently limits our initial retention in Florida for homeowners-related losses to approximately $190 million and provides coverage of 90% of covered losses between approximately $190 million and $700 million. Additionally, the catastrophe bond coverage we established in 2009 provides coverage of 50% of homeowners-related hurricane losses between $850 million and $1.15 billion.

For any catastrophe losses, we are subject to certain coinsurance requirements that affect the interaction of some elements of our catastrophe reinsurance program.

Our property catastrophe treaty for events outside the United States was renewed in 2009 with only modest changes in coverage. We increased both our initial retention and the reinsurance coverage in the top layer of the treaty by $25 million and increased our participation in the program. The treaty provides coverage of approximately 75% of losses (net of recoveries from other available reinsurance) between $100 million and $350 million.

In addition to our catastrophe treaties, we also have a commercial property per risk treaty which was renewed in 2009 with only slight changes in coverage. This treaty currently provides up to approximately $800 million (depending upon the currency in which the insurance policy was issued) of coverage per risk in excess of our initial retention, which is generally between $25 million and $35 million.

Our property reinsurance treaties generally contain terrorism exclusions for acts perpetrated by foreign terrorists, and for nuclear, biological, chemical and radiological loss causes whether such acts are perpetrated by foreign or domestic terrorists.

After declining modestly in 2008, reinsurance rates for property risks increased somewhat in 2009 as there were capacity restrictions for certain coverages in the market. Consequently, the overall cost of our catastrophe reinsurance program was modestly higher in 2009 than that in 2008. We do not expect the changes we made to our reinsurance program during 2009 to have a material effect on the Corporation’s results of operations, financial condition or liquidity.

Our major property reinsurance treaties expire on April 1, 2010. Due to a lower than average impact from catastrophes on the industry during 2009, we currently expect that reinsurance rates for property risks will decrease in 2010. The final structure of our program and amount of coverage purchased will be determinants of our total reinsurance costs in 2010.

Profitability

The combined loss and expense ratio, expressed as a percentage, is the key measure of underwriting profitability traditionally used in the property and casualty insurance business. Management evaluates the performance of our underwriting operations and of each of our business units using, among other measures, the combined loss and expense ratio calculated in accordance with statutory accounting principles. 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. When the combined ratio is under 100%, underwriting results are generally considered profitable; when the combined ratio is over 100%, underwriting results are generally considered unprofitable.

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

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Underwriting results were highly profitable in each of the last three years. The combined loss and expense ratio for our overall property and casualty business was as follows:

	Years Ended December 31
	2009			2008			2007
Loss ratio		55.4	%		58.5	%		52.8	%
Expense ratio		30.6			30.2			30.1
Combined loss and expense ratio		86.0	%		88.7	%		82.9	%

The relatively low loss ratio in each of the last three years reflected the favorable loss experience which we believe resulted from our disciplined underwriting in recent years. Results in all three years benefited from favorable prior year loss development. For more information on prior year loss development, see “Property and Casualty Insurance-Loss Reserves, Prior Year Loss Development.” The loss ratio was lower in 2009 compared to 2008 due to lower catastrophe losses, offset in part by a lower amount of favorable prior year loss development and a slight increase in the current accident year loss ratio excluding catastrophes. The loss ratio was higher in 2008 compared to 2007 due to higher catastrophe losses as well as the impact of rate reductions and several large non-catastrophe losses.

In 2009, net catastrophe losses incurred were $91 million, which represented 0.8 percentage points of the loss ratio. Net catastrophe losses incurred were $607 million in 2008, which represented 5.1 percentage points of the loss ratio. About $310 million of the catastrophe losses in 2008 related to Hurricane Ike, including our estimated share of an assessment from the Texas Windstorm Insurance Association, a windstorm insurance entity created by the State of Texas. Net catastrophe losses incurred in 2007 were $363 million, which represented 3.0 percentage points of the loss ratio.

We did not have any recoveries from our catastrophe reinsurance treaties during the three year period ended December 31, 2009 because there was no individual catastrophe for which our losses exceeded our retention under the treaties.

Our expense ratio was higher in 2009 compared with 2008. The increase was due primarily to an increase in commission rates in certain classes of business in the United States and, to a lesser extent, a decline in premiums written at a rate that exceeded the rate of reduction in our overhead expenses. Our expense ratio was similar in 2008 and 2007, as an increase in commissions was substantially offset by lower operating costs related to the run-off of our reinsurance business. The increase in commissions in 2008 compared with 2007 was largely the result of premium growth outside the United States in countries where commission rates are higher than in the United States as well as modestly higher commission rates in the United States in certain classes of business. The overhead expense component of our expense ratio related to our ongoing businesses was similar in 2008 and 2007.

In lieu of paying contingent commissions, beginning in 2007, we implemented a new guaranteed supplemental compensation program for agents and brokers in the United States with whom we previously had contingent commission agreements. Under this arrangement, agents and brokers are paid a percentage of written premiums on eligible lines of business in a calendar year based upon their prior performance. The change in our commission arrangements created a difference in the timing of expense recognition, which resulted in a one-time benefit to income during the 2007 transition year. The impact of the change in 2007 was to increase deferred policy acquisition costs by approximately $70 million. The change had no effect on the expense ratio.

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Review of Underwriting Results by Business Unit

Personal Insurance

Net premiums written from personal insurance, which represented 33% of our premiums written in 2009, decreased by 4% in 2009 and increased by 3% in 2008. Net premiums written for the classes of business within the personal insurance segment were as follows:

	Years Ended December 31
								% Increase
			% Decrease					(Decrease)
	2009		2009 vs. 2008			2008		2008 vs. 2007			2007
	(dollars in millions)
Automobile	$	577		(4	)%	$	602		(3	)%	$	621
Homeowners		2,339		(4	)		2,449		1			2,423
Other		741		(4	)		775		17			665
Total personal	$	3,657		(4	)	$	3,826		3		$	3,709

Personal automobile premiums decreased in 2009 and 2008 due to a highly competitive U.S. marketplace. The decrease in 2009 was also attributable to the impact of currency fluctuation on business written outside the United States. Premium growth in our homeowners business was constrained in both 2009 and 2008 due to the downturn in the U.S. economy that began in 2008, which resulted in a slowdown in new housing construction as well as lower demand for jewelry and fine arts policy endorsements. The in-force policy count for this class of business decreased modestly in 2009 and 2008. Premiums from our other personal business, which includes insurance for accident and health, excess liability and yacht coverages, decreased in 2009 after a substantial increase in 2008. The decrease in 2009 was driven by our accident and health business, due primarily to the effect of currency fluctuation on the non-U.S. component of this business. The adverse impact of currency fluctuation was offset in part by growth in the U.S. component of this business, due primarily to a select initiative. The substantial growth in our other personal business in 2008 was due primarily to a significant increase in accident and health premiums, which had strong growth both in the United States as well as outside the United States. Excess liability premiums were flat in 2009, after growing modestly in 2008.

Our personal insurance business produced highly profitable underwriting results in each of the last three years. The combined loss and expense ratios for the classes of business within the personal insurance segment were as follows:

	Years Ended December 31
	2009			2008			2007
Automobile		90.4	%		87.6	%		89.8	%
Homeowners		80.4			83.7			80.2
Other		90.8			97.5			96.4
Total personal		84.1			87.1			84.8

Our personal automobile results were profitable in each of the past three years. Results in all three years benefited from lower claim frequency and modest favorable prior year loss development.

Homeowners results were highly profitable in each of the last three years. The impact of catastrophes accounted for 1.5 percentage points of the combined loss and expense ratio for this class in 2009 compared with 7.8 percentage points in 2008 and 9.6 percentage points in 2007. Results in 2009 and 2008 were adversely impacted by the higher frequency and severity of large non-catastrophe losses.

Other personal business produced profitable results in each of the past three years. Results for our excess liability business were highly profitable in 2009 compared with near breakeven results in 2008 and unprofitable results in 2007. Results in 2009 benefited from favorable prior year loss development. Prior year loss development for our excess liability business was not significant in 2008 compared with

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unfavorable prior year loss development in 2007. Our yacht business was highly profitable in 2009 compared with unprofitable results in 2008 and profitable results in 2007. Yacht results in 2008 were adversely affected by several large non-catastrophe losses as well as several losses related to Hurricane Ike. Our accident and health business produced breakeven results in 2009 compared with profitable results in 2008 and highly profitable results in 2007.

Commercial Insurance

Net premiums written from commercial insurance, which represented 42% of our premiums written in 2009, decreased by 7% in 2009 and 2% in 2008. Net premiums written for the classes of business within the commercial insurance segment were as follows:

	Years Ended December 31
								% Increase
			% Decrease					(Decrease)
	2009		2009 vs. 2008			2008		2008 vs. 2007			2007
	(dollars in millions)
Multiple peril	$	1,121		(7	)%	$	1,210		(3	)%	$	1,252
Casualty		1,514		(8	)		1,654		(4	)		1,726
Workers’ compensation		761		(11	)		851		(4	)		890
Property and marine		1,264		(1	)		1,278		5			1,215
Total commercial	$	4,660		(7	)	$	4,993		(2	)	$	5,083

The decrease in premiums in our commercial insurance business in 2009 was primarily attributable to the adverse effects of the economic downturn, and to a lesser extent, the impact of currency fluctuation on business written outside the United States. The decline in premiums in most of our commercial classes in 2009 and 2008 also reflected the highly competitive marketplace, particularly for new business. The decrease in workers’ compensation premiums in 2009 reflected reduced exposures, due to lower amounts of covered payroll of our insureds, largely as a result of the downturn in the U.S. economy. U.S. renewal rates were up slightly in 2009, both in workers’ compensation and for commercial insurance overall. In 2008, we experienced modest decreases in renewal rates in the U.S., which were more pronounced in certain classes, such as workers’ compensation and large property risks, and also varied by geographic area. Growth in the property and marine classes in 2008 was primarily from a syndicated large risks program in both the U.S. and outside the U.S. and a marine initiative.

Retention levels of our existing customers have remained strong over the last three years. New business volume was down in 2009 and 2008 compared with the respective prior years. While we did obtain some new business in 2009, including as a result of the dislocation in the insurance markets caused by the impact of the financial market crisis on some of our competitors, the overall volume of new business was down from 2008 levels. This decline was due to continued competitive conditions and the general reduction in insurance demand due to the effects of the economic downturn. New business volume was down in 2008 compared with 2007 as it was difficult to find new opportunities at acceptable rates.

We have continued to maintain our underwriting discipline in the highly competitive market, renewing business and writing new business only where we believe we are securing acceptable rates and appropriate terms and conditions for the exposures.

Our commercial insurance business produced profitable underwriting results in each of the past three years. Results in all three years benefited from favorable loss experience, disciplined risk selection and appropriate terms and conditions in recent years. The results in 2008 were less profitable largely due to substantially higher catastrophe losses in the multiple peril and property and marine classes, primarily from Hurricane Ike. The impact of catastrophes accounted for 1.2 percentage points of the combined loss and expense ratio for our commercial insurance business in 2009, compared with 8.1 percentage points in 2008 and 2.6 percentage points in 2007. Excluding the effect of catastrophe losses, results for our

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commercial insurance business were modestly less profitable in each succeeding year, due in large part to the cumulative impact of rate reductions experienced over the past several years.

The combined loss and expense ratios for the classes of business within commercial insurance were as follows:

	Years Ended December 31
	2009			2008			2007
Multiple peril		85.8	%		85.3	%		80.8	%
Casualty		96.7			95.0			94.6
Workers’ compensation		92.7			82.1			77.6
Property and marine		83.3			108.8			84.3
Total commercial		89.9			93.9			85.8

Multiple peril results were highly profitable in each of the past three years. Substantial improvement in the property component of this business in 2009 compared with 2008, due to lower catastrophe losses, was offset by less profitable results in the liability component, due in large part to a lower amount of favorable prior year loss development. The less profitable results in 2008 compared with those in 2007 were driven by the property component of this business, largely due to higher catastrophe losses. The impact of catastrophes accounted for 1.6 percentage points of the combined loss and expense ratio for this class in 2009 compared with 8.5 percentage points in 2008 and 1.7 percentage points in 2007. The property component benefited from low non-catastrophe losses in all three years, particularly outside the United States in 2008.

Results for our casualty business were profitable in each of the past three years. The automobile component of our casualty business was modestly profitable in 2009 compared with highly profitable results in 2008 and 2007. Results in the primary liability component were profitable in each of the past three years, but less so in each succeeding year. Results in the excess liability component were profitable in each of the past three years, but more so in 2008. Excess liability results in all three years benefited from favorable prior year loss development. Casualty results in all three years were adversely affected by incurred losses related to asbestos and toxic waste claims. Our analysis of these exposures resulted in increases in the estimate of our ultimate liabilities. Such losses represented 3.2 percentage points of the combined loss and expense ratio for this class in 2009, 5.9 percentage points in 2008 and 5.3 percentage points in 2007.

Workers’ compensation results were profitable in 2009 compared with highly profitable results in 2008 and 2007. Results in these years benefited from our disciplined risk selection during the past several years as well as relatively favorable claim frequencies. Results in 2009 and 2008 were less profitable than the respective prior years due in part to lower rate levels associated with state reforms and increased competition. Results in 2009 were adversely impacted by increased large loss activity and modest unfavorable prior year loss development compared with favorable prior year loss development in 2008 and 2007.

Property and marine results were highly profitable in 2009 compared with unprofitable results in 2008 and highly profitable results in 2007. The unprofitable results in 2008 were due primarily to higher catastrophe losses and, to a lesser extent, an increase in the frequency and severity of large non-catastrophe losses. Catastrophe losses accounted for 1.5 percentage points of the combined loss and expense ratio in 2009 compared with 22.1 percentage points in 2008 and 8.2 percentage points in 2007. Excluding the impact of catastrophes, the combined ratio was 81.8%, 86.7% and 76.1% in 2009, 2008 and 2007, respectively.

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Specialty Insurance

Net premiums written from specialty insurance, which represented 25% of our premiums written in 2009, decreased by 6% in 2009 and 2% in 2008 compared with the respective prior years. Net premiums written for the classes of business within the specialty insurance segment were as follows:

	Years Ended December 31
								% Increase
			% Decrease					(Decrease)
	2009		2009 vs. 2008			2008		2008 vs. 2007			2007
	(dollars in millions)
Professional liability	$	2,413		(5	)%	$	2,546		(2	)%	$	2,605
Surety		326		(8	)		353		4			339
Total specialty	$	2,739		(6	)	$	2,899		(2	)	$	2,944

The decrease in net premiums written in our professional liability classes of business in 2009 was due to several factors. The continuation of the adverse effects of the economic downturn and a highly competitive marketplace resulted in fewer nonrecurring and merger and acquisition related coverage opportunities, a modest decrease in retention levels and fewer new business opportunities. In addition, the impact of currency fluctuation on business written outside the United States contributed to the decline in premiums in 2009. The decline in premiums in 2008 for these classes of business was due to the highly competitive environment, particularly in the directors and officers liability component.

Overall renewal rates in our professional liability business in the U.S. increased slightly in 2009. This reversed a downward trend in renewal rates for the professional liability classes that had begun several years earlier and had continued in 2008 in most classes of business, although it had slowed as the year progressed. Rates for directors and officers liability and errors and omissions liability insurance for financial institutions, however, increased in both 2009 and 2008, particularly for those companies implicated in the crisis in the financial markets.

Retention levels in the professional liability classes remained strong over the last three years. New business volume declined in each of the past two years, but more so in 2009, due in varying degrees to the competition in the marketplace as well as the effects of the economic downturn. While we obtained new business in 2009, including some as a result of the market dislocation in the insurance industry, the overall volume of new business was down from 2008. This decline was due to the decrease in the demand for insurance resulting from the economic downturn. We maintained our focus on small and middle market publicly traded and privately held companies and our commitment to maintaining underwriting discipline in this environment. We continued to obtain what we believe are acceptable rates and appropriate terms and conditions on both new business and renewals.

Premium growth in our surety business began to slow in the latter half of 2008 due to a more competitive environment and the impact of the weaker economy on the construction business. This trend generally continued in 2009.

Our specialty insurance business produced highly profitable underwriting results in each of the last three years. The combined loss and expense ratios for the classes of business within specialty insurance were as follows:

	Years Ended December 31
	2009			2008			2007
Professional liability		90.1	%		85.0	%		82.4	%
Surety		37.4			69.9			35.4
Total specialty		84.1			83.3			77.4

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Our professional liability business produced highly profitable results in each of the past three years but somewhat less so in each succeeding year. The profitability of our professional liability business was particularly strong outside the United States in all three years. The employment practices liability and fiduciary liability classes each produced highly profitable results in each of the three past years. The directors and officers liability class was profitable in all three years, particularly in 2007. Our errors and omissions liability business produced highly unprofitable results in 2009 compared with near breakeven results in 2008 and 2007. The fidelity class was highly profitable in each of the past three years, but less so in 2009 due to several large losses.

Collectively, the results for the professional liability classes benefited from favorable prior year loss development in each of the past three years, due primarily to the recognition of the positive loss trends we have been experiencing related to accident years 2003 through 2006. These trends were largely the result of a favorable business climate, lower policy limits and better terms and conditions. The combined ratio for the 2009 accident year in our professional liability business is modestly above breakeven, due in part to the uncertainty surrounding the crisis in the financial markets that began in 2008 and continued in 2009.

Our surety business produced highly profitable results in each of the past three years due to favorable loss experience. Results in 2008 were less profitable than those in 2009 and 2007 due to the adverse impact of one large loss. Our surety business tends to be characterized by infrequent but potentially high severity losses. When losses occur, they are mitigated, at times, by recovery rights to the customer’s assets, contract payments, collateral and bankruptcy recoveries.

The majority of our surety obligations are intended to be performance-based guarantees. We manage our exposure on an absolute basis and by specific bond type. We have substantial commercial and construction surety exposure for current and prior customers, including exposures related to surety bonds issued on behalf of companies that have experienced deterioration in creditworthiness since we issued bonds to them. We therefore may experience an increase in filed claims and may incur high severity losses, especially in light of the ongoing economic downturn. Such losses would be recognized if and when claims are filed and determined to be valid, and could have a material adverse effect on the Corporation’s results of operations.

Reinsurance Assumed

In December 2005, we completed a transaction involving a new Bermuda-based reinsurance company, Harbor Point Limited. As part of the transaction, we transferred our ongoing reinsurance assumed business and certain related assets, including renewal rights, to Harbor Point. Harbor Point generally did not assume our reinsurance liabilities relating to reinsurance contracts incepting prior to December 31, 2005. We retained those liabilities and the related assets.

For a transition period of about two years, Harbor Point underwrote specific reinsurance business on our behalf. We retained a portion of this business and ceded the balance to Harbor Point in return for a fronting commission. We received additional payments based on the amount of business renewed by Harbor Point. These amounts were recognized in income as earned.

Net premiums written from our reinsurance assumed business, which is in run-off, decreased by 67% in 2009 and 53% in 2008. The significant decrease in premiums in both years was expected in light of the sale of our ongoing reinsurance assumed business to Harbor Point.

Reinsurance assumed results were profitable in each of the past three years. While the volume of business declined substantially in each of the past three years, results in all three years, particularly in 2007, benefited from significant favorable prior year loss development.

Catastrophe Risk Management

Our property and casualty subsidiaries have exposure to losses caused by natural perils such as hurricanes and other windstorms, earthquakes, severe winter weather and brush fires and from man-

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made catastrophic events such as terrorism. The frequency and severity of catastrophes are inherently unpredictable.

Natural Catastrophes

The extent of losses from a natural catastrophe is a function of both the total amount of insured exposure in an area affected by the event and the severity of the event. We regularly assess our concentration of risk exposures in natural catastrophe exposed areas globally and have strategies and underwriting standards to manage this exposure through individual risk selection, subject to regulatory constraints, and through the purchase of catastrophe reinsurance. We use catastrophe modeling and a risk concentration management tool to monitor and control our accumulations of potential losses in natural catastrophe exposed areas in the United States, such as California and the gulf and east coasts, as well as in natural catastrophe exposed areas in other countries. The information provided by the catastrophe modeling and the risk concentration management tool has resulted in our non-renewing some accounts and has restricted us from writing others. Actual results may differ materially from those suggested by the model. We also continue to actively explore and analyze credible scientific evidence, including the potential impact of global climate change, that may affect our ability to manage exposure under the insurance policies we issue as well as the impact that laws and regulations intended to combat climate change may have on us.

Despite these efforts, the occurrence of one or more severe natural catastrophic events in heavily populated areas could have a material adverse effect on the Corporation’s results of operations, financial condition or liquidity.

Terrorism Risk and Legislation

The September 11, 2001 attack changed the way the property and casualty insurance industry views catastrophic risk. That tragic event demonstrated that numerous classes of business we write are subject to terrorism related catastrophic risks in addition to the catastrophic risks related to natural occurrences. This, together with the limited availability of terrorism reinsurance, has required us to change how we identify and evaluate risk accumulations. We have licensed a terrorism model that provides loss estimates under numerous event scenarios. Actual results may differ materially from those suggested by the model. Also, the risk concentration management tool referred to above enables us to identify locations and geographic areas that are exposed to risk accumulations. The information provided by the terrorism model and the risk concentration management tool has resulted in our non-renewing some accounts and has restricted us from writing others.

The Terrorism Risk Insurance Act of 2002 and more recently, the Terrorism Risk Insurance Program Reauthorization Act of 2007 (collectively TRIA), are limited duration programs under which the U.S. federal government has agreed to share the risk of loss arising from certain acts of terrorism with the insurance industry. The current program, which will terminate on December 31, 2014, is applicable to many lines of commercial business but excludes, among others, commercial automobile, surety and professional liability insurance, other than directors and officers liability. The current program provides protection from all foreign and domestic acts of terrorism.

As a precondition to recovery under TRIA, insurance companies with direct commercial insurance exposure in the United States for TRIA lines of business are required to make insurance for covered acts of terrorism available under their policies. Each insurer has a separate deductible that it must meet in the event of an act of terrorism before federal assistance becomes available. The deductible is based on a percentage of direct U.S. earned premiums for the covered lines of business in the previous calendar year. For 2010, that deductible is 20% of direct premiums earned in 2009 for these lines of business. For losses above the deductible, the federal government will pay for 85% of covered losses, while the insurer retains 15%. There is a combined annual aggregate limit for the federal government and all insurers of $100 billion. If acts of terrorism result in covered losses exceeding the $100 billion annual limit, insurers

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are not liable for additional losses. While the provisions of TRIA will serve to mitigate our exposure in the event of a large-scale terrorist attack, our deductible is substantial, approximating $950 million in 2010.

For certain classes of business, such as workers’ compensation, terrorism coverage is mandatory. For those classes of business where it is not mandatory, policyholders may choose not to accept terrorism coverage, which would, subject to other statutory or regulatory restrictions, reduce our exposure.

We also have exposure outside the United States to risk of loss from acts of terrorism. In some jurisdictions, we have access to government mechanisms that would mitigate our exposure.

We will continue to manage this type of catastrophic risk by monitoring terrorism risk aggregations. Nevertheless, given the unpredictability of the targets, frequency and severity of potential terrorist events as well as the very limited terrorism reinsurance coverage available in the market and the limitations of existing government programs and uncertainty regarding their availability in the future, the occurrence of a terrorist event could have a material adverse effect on the Corporation’s results of operations, financial condition or liquidity.

Loss Reserves

Unpaid losses and loss expenses, also referred to as loss reserves, are the largest liability of our property and casualty subsidiaries.

Our loss reserves include case estimates for claims that have been reported and estimates for claims that have been incurred but not reported at the balance sheet date as well as estimates of the expenses associated with processing and settling all reported and unreported claims, less estimates of anticipated salvage and subrogation recoveries. Estimates are based upon past loss experience modified for current trends as well as prevailing economic, legal and social conditions. Our loss reserves are not discounted to present value.

We regularly review our loss reserves using a variety of actuarial techniques. We update the reserve estimates as historical loss experience develops, additional claims are reported and/or settled and new information becomes available. Any changes in estimates are reflected in operating results in the period in which the estimates are changed.

Incurred but not reported (IBNR) reserve estimates are generally calculated by first projecting the ultimate cost of all claims that have occurred and then subtracting reported losses and loss expenses. Reported losses include cumulative paid losses and loss expenses plus case reserves. The IBNR reserve includes a provision for claims that have occurred but have not yet been reported to us, some of which are not yet known to the insured, as well as a provision for future development on reported claims. A relatively large proportion of our net loss reserves, particularly for long tail liability classes, are reserves for IBNR losses. In fact, more than 70% of our aggregate net loss reserves at December 31, 2009 were for IBNR losses.

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Our gross case and IBNR loss reserves and related reinsurance recoverable by class of business were as follows:

	Gross Loss Reserves						Reinsurance		Net Loss
December 31, 2009	Case		IBNR		Total		Recoverable		Reserves
	(in millions)
Personal insurance
Automobile	$	226	$	187	$	413	$	13	$	400
Homeowners		395		293		688		23		665
Other		372		660		1,032		160		872
Total personal		993		1,140		2,133		196		1,937
Commercial insurance
Multiple peril		550		1,091		1,641		26		1,615
Casualty		1,499		4,849		6,348		360		5,988
Workers’ compensation		887		1,448		2,335		197		2,138
Property and marine		781		426		1,207		449		758
Total commercial		3,717		7,814		11,531		1,032		10,499
Specialty insurance
Professional liability		1,626		6,379		8,005		453		7,552
Surety		18		48		66		8		58
Total specialty		1,644		6,427		8,071		461		7,610
Total insurance		6,354		15,381		21,735		1,689		20,046
Reinsurance assumed		305		799		1,104		364		740
Total	$	6,659	$	16,180	$	22,839	$	2,053	$	20,786

	Gross Loss Reserves						Reinsurance		Net Loss
December 31, 2008	Case		IBNR		Total		Recoverable		Reserves
	(in millions)
Personal insurance
Automobile	$	210	$	195	$	405	$	14	$	391
Homeowners		434		310		744		29		715
Other		382		608		990		175		815
Total personal		1,026		1,113		2,139		218		1,921
Commercial insurance
Multiple peril		589		1,034		1,623		37		1,586
Casualty		1,431		4,621		6,052		392		5,660
Workers’ compensation		832		1,377		2,209		227		1,982
Property and marine		889		449		1,338		499		839
Total commercial		3,741		7,481		11,222		1,155		10,067
Specialty insurance
Professional liability		1,690		5,959		7,649		474		7,175
Surety		28		51		79		11		68
Total specialty		1,718		6,010		7,728		485		7,243
Total insurance		6,485		14,604		21,089		1,858		19,231
Reinsurance assumed		370		908		1,278		354		924
Total	$	6,855	$	15,512	$	22,367	$	2,212	$	20,155

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Loss reserves, net of reinsurance recoverable, increased by $631 million or 3% in 2009. Loss reserves related to our insurance business increased by $815 million, including approximately $370 million related to currency fluctuation due to the weaker U.S. dollar at December 31, 2009 compared with December 31, 2008. Loss reserves related to our reinsurance assumed business, which is in run-off, decreased by $184 million.

Total gross case reserves related to our insurance business decreased by $131 million in 2009. The significant decrease in gross loss reserves for the commercial property and marine business was primarily due to the settlement in 2009 of losses related to catastrophes, including Hurricane Ike, as well as several large non-catastrophe losses that were unpaid as of December 31, 2008.

In establishing the loss reserves of our property and casualty subsidiaries, we consider facts currently known and the present state of the law and coverage litigation. Based on all information currently available, we believe that the aggregate loss reserves at December 31, 2009 were adequate to cover claims for losses that had occurred as of that date, including both those known to us and those yet to be reported. However, as described below, there are significant uncertainties inherent in the loss reserving process. It is therefore possible that management’s estimate of the ultimate liability for losses that had occurred as of December 31, 2009 may change, which could have a material effect on the Corporation’s results of operations and financial condition.

Estimates and Uncertainties

The process of establishing loss reserves is complex and imprecise as it must take into consideration many variables that are subject to the outcome of future events. As a result, informed subjective estimates and judgments as to our ultimate exposure to losses are an integral component of our loss reserving process.

Given the inherent complexity of the loss reserving process and the potential variability of the assumptions used, the actual emergence of losses could vary, perhaps substantially, from the estimate of losses included in our financial statements, particularly in those instances where settlements do not occur until well into the future. Our net loss reserves at December 31, 2009 were $20.8 billion. Therefore, a relatively small percentage change in the estimate of net loss reserves would have a material effect on the Corporation’s results of operations.

Reserves Other than Those Relating to Asbestos and Toxic Waste Claims.  Our loss reserves include amounts related to short tail and long tail classes of business. “Tail” refers to the time period between the occurrence of a loss and the settlement of the claim. The longer the time span between the incidence of a loss and the settlement of the claim, the more the ultimate settlement amount can vary.

Short tail classes consist principally of homeowners, commercial property and marine business. For these classes, claims are generally reported and settled shortly after the loss occurs and the claims relate to tangible property. Consequently, the estimation of loss reserves for these classes is less complex.

Most of our loss reserves relate to long tail liability classes of business. Long tail classes include directors and officers liability, errors and omissions liability and other professional liability coverages, commercial primary and excess liability, workers’ compensation and other liability coverages. For many liability claims significant periods of time, ranging up to several years or more, may elapse between the occurrence of the loss, the reporting of the loss to us and the settlement of the claim. As a result, loss experience in the more recent accident years for the long tail liability classes has limited statistical credibility because a relatively small proportion of losses in these accident years are reported claims and an even smaller proportion are paid losses. An accident year is the calendar year in which a loss is incurred or, in the case of claims-made policies, the calendar year in which a loss is reported. Liability claims are also more susceptible to litigation and can be significantly affected by changing contract interpretations and the legal environment. Consequently, the estimation of loss reserves for these classes is more complex and typically subject to a higher degree of variability than for short tail classes. As a result, the role of judgment is much greater for these reserve estimates.

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Most of our reinsurance assumed business is long tail casualty reinsurance. Reserve estimates for this business are therefore subject to the variability caused by extended loss emergence periods. The estimation of loss reserves for this business is further complicated by delays between the time the claim is reported to the ceding insurer and when it is reported by the ceding insurer to us and by our dependence on the quality and consistency of the loss reporting by the ceding company.

Our actuaries perform a comprehensive review of loss reserves for each of the numerous classes of business we write at least once a year. The timing of such review varies by class of business and, for some classes, the jurisdiction in which the policy was written. The review process takes into consideration the variety of trends that impact the ultimate settlement of claims in each particular class of business. Additionally, each quarter our actuaries review the emergence of paid and reported losses relative to expectations and, as necessary, conduct reserve reviews for particular classes of business.

The loss reserve estimation process relies on the basic assumption that past experience, adjusted for the effects of current developments and likely trends, is an appropriate basis for predicting future outcomes. As part of that process, our actuaries use a variety of actuarial methods that analyze experience, trends and other relevant factors. The principal standard actuarial methods used by our actuaries in the loss reserve reviews include loss development factor methods, expected loss ratio methods, Bornheutter-Ferguson methods and frequency/severity methods.

Loss development factor methods generally assume that the losses yet to emerge for an accident year are proportional to the paid or reported loss amount observed so far. Historical patterns of the development of paid and reported losses by accident year can be predictive of the expected future patterns that are applied to current paid and reported losses to generate estimated ultimate losses by accident year.

Expected loss ratio methods use loss ratios for prior accident years, adjusted to reflect our evaluation of recent loss trends, the current risk environment, changes in our book of business and changes in our pricing and underwriting, to determine the appropriate expected loss ratio for a given accident year. The expected loss ratio for each accident year is multiplied by the earned premiums for that year to calculate estimated ultimate losses.

Bornheutter-Ferguson methods are combinations of an expected loss ratio method and a loss development factor method, where the loss development factor method is given more weight as an accident year matures.

Frequency/severity methods first project ultimate claim counts (using one or more of the other methods described above) and then multiply those counts by an estimated average claim cost to calculate estimated ultimate losses. The average claim costs are often estimated through a regression analysis of historical severity data. Generally, these methods work best for high frequency, low severity classes of business.

In completing their loss reserve analysis, our actuaries are required to determine the most appropriate actuarial methods to employ for each class of business. Within each class, the business is further segregated by accident year and where appropriate by jurisdiction. Each estimation method has its own pattern, parameter and/or judgmental dependencies, with no estimation method being better than the others in all situations. The relative strengths and weaknesses of the various estimation methods when applied to a particular class of business can also change over time, depending on the underlying circumstances. In many cases, multiple estimation methods will be valid for the particular facts and circumstances of the relevant class of business. The manner of application and the degree of reliance on a given method will vary by class of business, by accident year and by jurisdiction based on our actuaries’ evaluation of the above dependencies and the potential volatility of the loss frequency and severity patterns. The estimation methods selected or given weight by our actuaries at a particular valuation date are those that are believed to produce the most reliable indication for the loss reserves being evaluated. These selections incorporate input from claims personnel, pricing actuaries and underwriting management on loss cost trends and other factors that could affect the reserve estimates.

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For short tail classes, the emergence of paid and incurred losses generally exhibits a reasonably stable pattern of loss development from one accident year to the next. Thus, for these classes, the loss development factor method is generally relatively straightforward to apply and usually requires only modest extrapolation. For long tail classes, applying the loss development factor method often requires more judgment in selecting development factors as well as more significant extrapolation. For those long tail classes with high frequency and relatively low per-loss severity (e.g., workers’ compensation), volatility will often be sufficiently modest for the loss development factor method to be given significant weight, except in the most recent accident years.

For certain long tail classes of business, however, anticipated loss experience is less predictable because of the small number of claims and erratic claim severity patterns. These classes include directors and officers liability, errors and omissions liability and commercial excess liability, among others. For these classes, the loss development factor methods may not produce a reliable estimate of ultimate losses in the most recent accident years since many claims either have not yet been reported to us or are only in the early stages of the settlement process. Therefore, the actuarial estimates for these accident years are based on less extrapolatory methods, such as expected loss ratio and Bornheutter-Ferguson methods. Over time, as a greater number of claims are reported and the statistical credibility of loss experience increases, loss development factor methods are given increasingly more weight.

Using all the available data, our actuaries select an indicated loss reserve amount for each class of business based on the various assumptions, projections and methods. The total indicated reserve amount determined by our actuaries is an aggregate of the indicated reserve amounts for the individual classes of business. The ultimate outcome is likely to fall within a range of potential outcomes around this indicated amount, but the indicated amount is not expected to be precisely the ultimate liability.

Senior management meets with our actuaries at the end of each quarter to review the results of the latest loss reserve analysis. Based on this review, management determines the carried reserve for each class of business. In making the determination, management considers numerous factors, such as changes in actuarial indications in the period, the maturity of the accident year, trends observed over the recent past and the level of volatility within a particular class of business. In doing so, management must evaluate whether a change in the data represents credible actionable information or an anomaly. Such an assessment requires considerable judgment. Even if a change is determined to be permanent, it is not always possible to determine the extent of the change until sometime later. As a result, there can be a time lag between the emergence of a change and a determination that the change should be reflected in the carried loss reserves. In general, changes are made more quickly to more mature accident years and less volatile classes of business.

Among the numerous factors that contribute to the inherent uncertainty in the process of establishing loss reserves are the following:

•  changes in the inflation rate for goods and services related to covered damages such as medical care and home repair costs,

•  changes in the judicial interpretation of policy provisions relating to the determination of coverage,

•  changes in the general attitude of juries in the determination of liability and damages,

•  legislative actions,

•  changes in the medical condition of claimants,

•  changes in our estimates of the number and/or severity of claims that have been incurred but not reported as of the date of the financial statements,

•  changes in our book of business,

•  changes in our underwriting standards, and

•  changes in our claim handling procedures.

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In addition, we must consider the uncertain effects of emerging or potential claims and coverage issues that arise as legal, judicial and social conditions change. These issues have had, and may continue to have, a negative effect on our loss reserves by either extending coverage beyond the original underwriting intent or by increasing the number or size of claims. Recent examples of such issues include the number of directors and officers liability and errors and omissions liability claims arising out of the ongoing crisis in the financial markets, the number of directors and officers liability claims arising out of stock option “backdating” practices by certain public companies, the number and size of directors and officers liability and errors and omissions liability claims arising out of investment banking practices and accounting and other corporate malfeasance, and exposure to claims asserted for bodily injury as a result of long term exposure to harmful products or substances. As a result of issues such as these, the uncertainties inherent in estimating ultimate claim costs on the basis of past experience have grown, further complicating the already complex loss reserving process.

As part of our loss reserving analysis, we take into consideration the various factors that contribute to the uncertainty in the loss reserving process. Those factors that could materially affect our loss reserve estimates include loss development patterns and loss cost trends, rate and exposure level changes, the effects of changes in coverage and policy limits, business mix shifts, the effects of regulatory and legislative developments, the effects of changes in judicial interpretations, the effects of emerging claims and coverage issues and the effects of changes in claim handling practices. In making estimates of reserves, however, we do not necessarily make an explicit assumption for each of these factors. Moreover, all estimation methods do not utilize the same assumptions and typically no single method is determinative in the reserve analysis for a class of business. Consequently, changes in our loss reserve estimates generally are not the result of changes in any one assumption. Instead, the variability will be affected by the interplay of changes in numerous assumptions, many of which are implicit to the approaches used.

For each class of business, we regularly adjust the assumptions and actuarial methods used in the estimation of loss reserves in response to our actual loss experience as well as our judgments regarding changes in trends and/or emerging patterns. In those instances where we primarily utilize analyses of historical patterns of the development of paid and reported losses, this may be reflected, for example, in the selection of revised loss development factors. In those long tail classes of business that comprise a majority of our loss reserves and for which loss experience is less predictable due to potential changes in judicial interpretations, potential legislative actions and potential claims issues, this may be reflected in a judgmental change in our estimate of ultimate losses for particular accident years.

The future impact of the various factors that contribute to the uncertainty in the loss reserving process is extremely difficult to predict. There is potential for significant variation in the development of loss reserves, particularly for long tail classes of business. We do not derive statistical loss distributions or outcome confidence levels around our loss reserve estimate. Actuarial ranges of reasonable estimates are not a true reflection of the potential volatility between carried loss reserves and the ultimate settlement amount of losses incurred prior to the balance sheet date. This is due, among other reasons, to the fact that actuarial ranges are developed based on known events as of the valuation date whereas the ultimate disposition of losses is subject to the outcome of events and circumstances that were unknown as of the valuation date.

The following discussion includes disclosure of possible variation from current estimates of loss reserves due to a change in certain key assumptions for particular classes of business. These impacts are estimated individually, without consideration for any correlation among such assumptions or among lines of business. Therefore, it would be inappropriate to take the amounts and add them together in an attempt to estimate volatility for our loss reserves in total. We believe that the estimated variation in reserves detailed below is a reasonable estimate of the possible variation that may occur in the future. However, if such variation did occur, it would likely occur over a period of several years and therefore its impact on the Corporation’s results of operations would be spread over the same period. It is important to note, however, that there is the potential for future variation greater than the amounts discussed below.

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Two of the larger components of our loss reserves relate to the professional liability classes other than fidelity and to commercial excess liability. The respective reported loss development patterns are key assumptions in estimating loss reserves for these classes of business, both as applied directly to more mature accident years and as applied indirectly (e.g., via Bornheutter-Ferguson methods) to less mature accident years.

Reserves for the professional liability classes other than fidelity were $7.2 billion, net of reinsurance, at December 31, 2009. Based on a review of our loss experience, if the loss development factor for each accident year changed such that the cumulative loss development factor for the most recent accident year changed by 10%, we estimate that the net reserves for professional liability classes other than fidelity would change by approximately $675 million, in either direction. This degree of change in the reported loss development pattern is within the historical variation around the averages in our data.

Reserves for commercial excess liability (excluding asbestos and toxic waste claims) were $3.1 billion, net of reinsurance, at December 31, 2009. These reserves are included within commercial casualty. Based on a review of our loss experience, if the loss development factor for each accident year changed such that the cumulative loss development factor for the most recent accident year changed by 15%, we estimate that the net reserves for commercial excess liability would change by approximately $300 million, in either direction. This degree of change in the reported loss development pattern is within the historical variation around the averages in our data.

Reserves Relating to Asbestos and Toxic Waste Claims.  The estimation of loss reserves relating to asbestos and toxic waste claims on insurance policies written many years ago is subject to greater uncertainty than other types of claims due to inconsistent court decisions as well as judicial interpretations and legislative actions that in some cases have tended to broaden coverage beyond the original intent of such policies and in others have expanded theories of liability. The insurance industry as a whole is engaged in extensive litigation over coverage and liability issues and is thus confronted with a continuing uncertainty in its efforts to quantify these exposures.

Reserves for asbestos and toxic waste claims cannot be estimated with traditional actuarial loss reserving techniques that rely on historical accident year loss development factors. Instead, we rely on an exposure-based analysis that involves a detailed review of individual policy terms and exposures. Because each policyholder presents different liability and coverage issues, we generally evaluate our exposure on a policyholder-by-policyholder basis, considering a variety of factors that are unique to each policyholder. Quantitative techniques have to be supplemented by subjective considerations including management’s judgment.

We establish case reserves and expense reserves for costs of related litigation where sufficient information has been developed to indicate the involvement of a specific insurance policy. In addition, IBNR reserves are established to cover additional exposures on both known and unasserted claims.

We believe that the loss reserves carried at December 31, 2009 for asbestos and toxic waste claims were adequate. However, given the judicial decisions and legislative actions that have broadened the scope of coverage and expanded theories of liability in the past and the possibilities of similar interpretations in the future, it is possible that our estimate of loss reserves relating to these exposures may increase in future periods as new information becomes available and as claims develop.

Asbestos Reserves.  Asbestos remains the most significant and difficult mass tort for the insurance industry in terms of claims volume and dollar exposure. Asbestos claims relate primarily to bodily injuries asserted by those who came in contact with asbestos or products containing asbestos. Tort theory affecting asbestos litigation has evolved over the years. Early court cases established the “continuous trigger” theory with respect to insurance coverage. Under this theory, insurance coverage is deemed to be triggered from the time a claimant is first exposed to asbestos until the manifestation of any disease. This interpretation of a policy trigger can involve insurance policies over many years and increases insurance companies’ exposure to liability. Until recently, judicial interpretations and legislative actions attempted to maximize insurance availability from both a coverage and liability standpoint.

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New asbestos claims and new exposures on existing claims have continued despite the fact that usage of asbestos has declined since the mid-1970’s. Many claimants were exposed to multiple asbestos products over an extended period of time. As a result, claim filings typically name dozens of defendants. The plaintiffs’ bar has solicited new claimants through extensive advertising and through asbestos medical screenings. A vast majority of asbestos bodily injury claims have been filed by claimants who do not show any signs of asbestos related disease. New asbestos cases are often filed in those jurisdictions with a reputation for judges and juries that are extremely sympathetic to plaintiffs.

Approximately 80 manufacturers and distributors of asbestos products have filed for bankruptcy protection as a result of asbestos related liabilities. A bankruptcy sometimes involves an agreement to a plan between the debtor and its creditors, including current and future asbestos claimants. Although the debtor is negotiating in part with its insurers’ money, insurers are generally given only limited opportunity to be heard. In addition to contributing to the overall number of claims, bankruptcy proceedings have also caused increased settlement demands against remaining solvent defendants.

There have been some positive legislative and judicial developments in the asbestos environment over the past several years:

•  Various challenges to the mass screening of claimants have been mounted which have led to higher medical evidentiary standards. For example, several asbestos injury settlement trusts have suspended their acceptance of claims that were based on the diagnosis of specific physicians or screening companies. Further investigations of the medical screening process for asbestos claims are underway.

•  A number of states have implemented legislative and judicial reforms that focus the courts’ resources on the claims of the most seriously injured. Those who allege serious injury and can present credible evidence of their injuries are receiving priority trial settings in the courts, while those who have not shown any credible disease manifestation are having their hearing dates delayed or placed on an inactive docket, which preserves the right to pursue litigation in the future.

•  A number of key jurisdictions have adopted venue reform that requires plaintiffs to have a connection to the jurisdiction in order to file a complaint.

•  In recognition that many aspects of bankruptcy plans are unfair to certain classes of claimants and to the insurance industry, these plans are beginning to be closely scrutinized by the courts and rejected when appropriate.

Our most significant individual asbestos exposures involve products liability on the part of “traditional” defendants who were engaged in the manufacture, distribution or installation of asbestos products. We wrote excess liability and/or general liability coverages for these insureds. While these insureds are relatively few in number, their exposure has become substantial due to the increased volume of claims, the erosion of the underlying limits and the bankruptcies of target defendants.

Our other asbestos exposures involve products and non-products liability on the part of “peripheral” defendants, including a mix of manufacturers, distributors and installers of certain products that contain asbestos in small quantities and owners or operators of properties where asbestos was present. Generally, these insureds are named defendants on a regional rather than a nationwide basis. As the financial resources of traditional asbestos defendants have been depleted, plaintiffs are targeting these viable peripheral parties with greater frequency and, in many cases, for large awards.

Asbestos claims against the major manufacturers, distributors or installers of asbestos products were typically presented under the products liability section of primary general liability policies as well as under excess liability policies, both of which typically had aggregate limits that capped an insurer’s exposure. In recent years, a number of asbestos claims by insureds are being presented as “non-products” claims, such as those by installers of asbestos products and by property owners or operators who allegedly had asbestos on their property, under the premises or operations section of primary general

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liability policies. Unlike products exposures, these non-products exposures typically had no aggregate limits on coverage, creating potentially greater exposure. Further, in an effort to seek additional insurance coverage, some insureds with installation activities who have substantially eroded their products coverage are presenting new asbestos claims as non-products operations claims or attempting to reclassify previously settled products claims as non-products claims to restore a portion of previously exhausted products aggregate limits. It is difficult to predict whether insureds will be successful in asserting claims under non-products coverage or whether insurers will be successful in asserting additional defenses. Accordingly, the ultimate cost to insurers of the claims for coverage not subject to aggregate limits is uncertain.

In establishing our asbestos reserves, we evaluate the exposure presented by each insured. As part of this evaluation, we consider a variety of factors including: the available insurance coverage; limits and deductibles; the jurisdictions involved; past settlement values of similar claims; the potential role of other insurance, particularly underlying coverage below our excess liability policies; potential bankruptcy impact; relevant judicial interpretations; and applicable coverage defenses, including asbestos exclusions.

Various U.S. federal proposals to solve the ongoing asbestos litigation crisis have been considered by the U.S. Congress over the past few years, but none have yet been enacted. The prospect of federal asbestos reform legislation remains uncertain. As a result, we have assumed a continuation of the current legal environment with no benefit from any federal asbestos reform legislation.

Our actuaries and claim personnel perform periodic analyses of our asbestos related exposures. The analyses during 2007 noted an increase in our estimate of the ultimate liabilities related to certain of our traditional asbestos defendants. Based on these analyses, we increased our net asbestos loss reserves by $75 million in 2007. The analyses during 2008 and 2009 noted no developments that would indicate the need to change our estimate of ultimate liabilities related to asbestos claims.

The following table presents a reconciliation of the beginning and ending loss reserves related to asbestos claims.

	Years Ended December 31
	2009		2008		2007
	(in millions)
Gross loss reserves, beginning of year	$	794	$	838	$	841
Reinsurance recoverable, beginning of year		47		45		52
Net loss reserves, beginning of year		747		793		789
Net incurred losses		—		—		75
Net losses paid		58		46		71
Net loss reserves, end of year		689		747		793
Reinsurance recoverable, end of year		39		47		45
Gross loss reserves, end of year	$	728	$	794	$	838

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The following table presents the number of policyholders for whom we have open asbestos case reserves and the related net loss reserves at December 31, 2009 as well as the net losses paid during 2009 by component.

	Number of		Net Loss		Net Losses
	Policyholders		Reserves		Paid
	(in millions)
Traditional defendants		22	$	175	$	10
Peripheral defendants		374		382		48
Future claims from unknown policyholders				132
			$	689	$	58

Significant uncertainty remains as to our ultimate liability related to asbestos related claims. This uncertainty is due to several factors including:

•  the long latency period between asbestos exposure and disease manifestation and the resulting potential for involvement of multiple policy periods for individual claims;

•  plaintiffs’ expanding theories of liability and increased focus on peripheral defendants;

•  the volume of claims by unimpaired plaintiffs and the extent to which they can be precluded from making claims;

•  the efforts by insureds to claim the right to non-products coverage not subject to aggregate limits;

•  the number of insureds seeking bankruptcy protection as a result of asbestos related liabilities;

•  the ability of claimants to bring a claim in a state in which they have no residency or exposure;

•  the impact of the exhaustion of primary limits and the resulting increase in claims on excess liability policies we have issued;

•  inconsistent court decisions and diverging legal interpretations; and

•  the possibility, however remote, of federal legislation that would address the asbestos problem.

These significant uncertainties are not likely to be resolved in the near future.

Toxic Waste Reserves.  Toxic waste claims relate primarily to pollution and related cleanup costs. Our insureds have two potential areas of exposure — hazardous waste dump sites and pollution at the insured site primarily from underground storage tanks and manufacturing processes.

The U.S. federal Comprehensive Environmental Response Compensation and Liability Act of 1980 (Superfund) has been interpreted to impose strict, retroactive and joint and several liability on potentially responsible parties (PRPs) for the cost of remediating hazardous waste sites. Most sites have multiple PRPs.

Most PRPs named to date are parties who have been generators, transporters, past or present landowners or past or present site operators. These PRPs had proper government authorization in many instances. However, relative fault has not been a factor in establishing liability. Insurance policies issued to PRPs were not intended to cover claims arising from gradual pollution. Since 1986, most policies have specifically excluded such exposures.

Environmental remediation claims tendered by PRPs and others to insurers have frequently resulted in disputes over insurers’ contractual obligations with respect to pollution claims. The resulting litigation against insurers extends to issues of liability, coverage and other policy provisions.

There is substantial uncertainty involved in estimating our liabilities related to these claims. First, the liabilities of the claimants are extremely difficult to estimate. At any given waste site, the allocation of remediation costs among governmental authorities and the PRPs varies greatly depending on a variety of factors. Second, different courts have addressed liability and coverage issues regarding pollution claims

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and have reached inconsistent conclusions in their interpretation of several issues. These significant uncertainties are not likely to be resolved definitively in the near future.

Uncertainties also remain as to the Superfund law itself. Superfund’s taxing authority expired on December 31, 1995 and has not been re-enacted. Federal legislation appears to be at a standstill. At this time, it is not possible to predict the direction that any reforms may take, when they may occur or the effect that any changes may have on the insurance industry.

Without federal movement on Superfund reform, the enforcement of Superfund liability has occasionally shifted to the states. States are being forced to reconsider state-level cleanup statutes and regulations. As individual states move forward, the potential for conflicting state regulation becomes greater. In a few states, we have seen cases brought against insureds or directly against insurance companies for environmental pollution and natural resources damages. To date, only a few natural resource claims have been filed and they are being vigorously defended. Significant uncertainty remains as to the cost of remediating the state sites. Because of the large number of state sites, such sites could prove even more costly in the aggregate than Superfund sites.

In establishing our toxic waste reserves, we evaluate the exposure presented by each insured. As part of this evaluation, we consider a variety of factors including: the probable liability, available insurance coverage, past settlement values of similar claims, relevant judicial interpretations, applicable coverage defenses as well as facts that are unique to each insured.

During 2008, the analysis of our toxic waste exposures indicated that some of our insureds had become responsible for the remediation of additional polluted sites and that, as clean up standards continue to evolve as a result of technology advances, the estimated cost of remediation of certain sites had increased. In addition, two claims were settled at substantially higher amounts than expected. Based on these developments, we increased our net toxic waste loss reserves by $85 million in 2008.

During 2009, the analysis of our toxic waste exposures indicated higher than expected development driven by a relatively small number of exposures. Based on these developments, as well as the increased cost to remediate certain sites, we increased our net toxic waste loss reserves by $90 million in 2009.

The following table presents a reconciliation of our beginning and ending loss reserves, net of reinsurance recoverable, related to toxic waste claims. The reinsurance recoverable related to these claims is minimal.

	Years Ended December 31
	2009		2008		2007
	(in millions)
Reserves, beginning of year	$	181	$	154	$	169
Incurred losses		90		85		13
Losses paid		56		58		28
Reserves, end of year	$	215	$	181	$	154

At December 31, 2009, $142 million of the net toxic waste loss reserves were IBNR reserves.

Reinsurance Recoverable.  Reinsurance recoverable is the estimated amount recoverable from reinsurers related to the losses we have incurred. At December 31, 2009, reinsurance recoverable included $209 million recoverable with respect to paid losses and loss expenses, which is included in other assets, and $2.1 billion recoverable on unpaid losses and loss expenses.

Reinsurance recoverable on unpaid losses and loss expenses represents an estimate of the portion of our gross loss reserves that will be recovered from reinsurers. Such reinsurance recoverable is estimated as part of our loss reserving process using assumptions that are consistent with the assumptions used in estimating the gross loss reserves. Consequently, the estimation of reinsurance recoverable is subject to similar judgments and uncertainties as the estimation of gross loss reserves.

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Ceded reinsurance contracts do not relieve us of our primary obligation to our policyholders. Consequently, an exposure exists with respect to reinsurance recoverable to the extent that any reinsurer is unable to meet its obligations or disputes the liabilities we believe it has assumed under the reinsurance contracts. We are selective in regard to our reinsurers, placing reinsurance with only those reinsurers who we believe have strong balance sheets and superior underwriting ability, and we monitor the financial strength of our reinsurers on an ongoing basis. Nevertheless, in recent years, certain of our reinsurers have experienced financial difficulties or exited the reinsurance business. In addition, we may become involved in coverage disputes with our reinsurers. A provision for estimated uncollectible reinsurance is recorded based on periodic evaluations of balances due from reinsurers, the financial condition of the reinsurers, coverage disputes and other relevant factors.

Prior Year Loss Development

Changes in loss reserve estimates are unavoidable because such estimates are subject to the outcome of future events. Loss trends vary and time is required for changes in trends to be recognized and confirmed. Reserve changes that increase previous estimates of ultimate cost are referred to as unfavorable or adverse development or reserve strengthening. Reserve changes that decrease previous estimates of ultimate cost are referred to as favorable development or reserve releases.

A reconciliation of our beginning and ending loss reserves, net of reinsurance, for the three years ended December 31, 2009 is as follows:

	Years Ended December 31
	2009			2008			2007
	(in millions)
Net loss reserves, beginning of year	$	20,155		$	20,316		$	19,699
Net incurred losses and loss expenses related to
Current year		7,030			7,771			6,996
Prior years		(762	)		(873	)		(697	)
		6,268			6,898			6,299
Net payments for losses and loss expenses related to
Current year		1,943			2,401			1,883
Prior years		4,063			4,108			4,066
		6,006			6,509			5,949
Foreign currency translation effect		369			(550	)		267
Net loss reserves, end of year	$	20,786		$	20,155		$	20,316

During 2009, we experienced overall favorable prior year development of $762 million, which represented 3.8% of the net loss reserves as of December 31, 2008. This compares with favorable prior year development of $873 million during 2008, which represented 4.3% of the net loss reserves at December 31, 2007, and favorable prior year development of $697 million during 2007, which represented 3.5% of the net loss reserves at December 31, 2006. Such favorable development was reflected in operating results in these respective years.

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The following table presents the overall prior year loss development for the three years ended December 31, 2009 by accident year.

	Calendar Year
	(Favorable) Unfavorable Development
Accident Year	2009			2008			2007
	(in millions)
2008	$	62
2007		(180	)	$	(86	)
2006		(230	)		(224	)	$	(141	)
2005		(299	)		(364	)		(233	)
2004		(256	)		(272	)		(240	)
2003		(50	)		(84	)		(148	)
2002		(33	)		(25	)		(71	)
2001		30			31			53
2000		11			25			(17	)
1999 and prior		183			126			100
	$	(762	)	$	(873	)	$	(697	)

The net favorable development of $762 million in 2009 was due to various factors. The most significant factors were:

•  We experienced favorable development of about $340 million in the professional liability classes other than fidelity, including about $110 million outside the U.S. A significant amount of favorable development occurred in the directors and officers liability, fiduciary liability and employment practices liability classes. We had a modest amount of unfavorable development in the errors and omissions liability class, particularly outside the U.S. A majority of the favorable development in the professional liability classes was in accident years 2004 through 2006. Reported loss activity related to these accident years was less than expected reflecting a favorable business climate, lower policy limits and better terms and conditions. As these years have become increasingly mature, and as the reported loss experience has emerged better than we expected, we have gradually decreased the expected loss ratios for these accident years. This favorable development was recognized as one among many factors in the determination of loss reserves for more current accident years. Our estimates of expected loss ratios for more recent accident years, particularly 2007 through 2009, were more influenced by the uncertainty surrounding the crisis in the financial markets as well as the general downward trend in prices in recent years.

•  We experienced favorable development of about $160 million in the aggregate in the homeowners and commercial property classes, primarily related to the 2007 and 2008 accident years. The severity of late reported property claims that emerged during 2009 was lower than expected and development on prior year catastrophe events was favorable. Because the incidence of large property losses is subject to a considerable element of fortuity, reserve estimates for these classes are based on an analysis of past loss experience on average over a period of years. As a result, the favorable development in 2009 was recognized, but had a relatively modest effect on our determination of carried property loss reserves at December 31, 2009.

•  We experienced favorable development of about $150 million in the aggregate in the commercial and personal liability classes. Favorable development in more recent accident years, particularly 2004 through 2006, was partially offset by adverse development in accident years 1999 and prior, which included $90 million of incurred losses related to toxic waste claims. The frequency and severity of prior period excess and primary liability claims have been generally lower than expected and the effects of underwriting changes that affected these years appear to have been

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more positive than expected. These factors were reflected in the determination of the carried loss reserves for these classes at December 31, 2009.

•  We experienced favorable development of about $55 million in the run-off of our reinsurance assumed business due primarily to better than expected reported loss activity from cedants.

•  We experienced favorable development of about $35 million in the surety business due to lower than expected loss emergence, mainly related to more recent accident years. Loss reserve estimates at the end of 2008 in this class included an expectation of more late reported losses than actually occurred in 2009. However, since we would still expect such losses to occur in a typical year, factors that resulted in the favorable development in 2009 were given only modest weight in our determination of carried surety loss reserves at December 31, 2009.

•  We experienced favorable development of about $30 million in the personal automobile business due primarily to lower than expected severity. This factor was given only modest weight in our determination of carried personal automobile loss reserves at December 31, 2009.

The net favorable development of $873 million in 2008 was also due to various factors. The most significant factors were:

•  We experienced favorable development of about $390 million in the professional liability classes other than fidelity, including about $150 million outside the U.S. Favorable development occurred in each of the primary professional liability classes, including directors and officers liability, errors and omissions liability, fiduciary liability and employment practices liability. A majority of this favorable development was in the 2004 and 2005 accident years. Reported loss activity related to these accident years was less than expected, reflecting a favorable business climate, lower policy limits and better terms and conditions. As these years became increasingly mature, and as the reported loss experience emerged better than we expected, we gradually decreased the expected loss ratios for these accident years.

•  We experienced favorable development of about $170 million in the aggregate in the homeowners and commercial property classes, primarily related to the 2006 and 2007 accident years. The severity of late reported property claims that emerged during 2008 was lower than expected.

•  We experienced favorable development of about $120 million in the commercial liability classes. Favorable development, particularly in excess liability and multiple peril liability classes in accident years 2002 through 2006, more than offset adverse development in accident years prior to 1998, which was mostly due to $85 million of incurred losses related to toxic waste claims.

•  We experienced favorable development of about $75 million in the fidelity class due to lower than expected reported loss emergence, particularly outside the U.S., mainly related to recent accident years.

•  We experienced favorable development of about $60 million in the run-off of our reinsurance assumed business due primarily to better than expected reported loss activity from cedants.

•  We experienced favorable development of about $30 million in the workers’ compensation class due in part to the positive effects of reforms in California.

•  We experienced favorable development of about $30 million in the personal automobile business due primarily to lower than expected severity.

The net favorable development of $697 million in 2007 was also due to various factors. The most significant factors were:

•  We experienced favorable development of about $300 million in the professional liability classes other than fidelity, including about $100 million outside the U.S. A majority of this favorable development was in the 2003 through 2005 accident years. Reported loss activity related to these accident years was less than expected, reflecting a favorable business climate, lower policy limits

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and better terms and conditions. While these accident years were still somewhat immature, we concluded that there was sufficient evidence to modestly decrease the expected loss ratios for these accident years.

•  We experienced favorable development of about $180 million in the aggregate in the homeowners and commercial property classes, primarily related to the 2005 and 2006 accident years. This favorable development arose from the lower than expected emergence of actual losses during 2007 relative to expectations used to establish our loss reserves at the end of 2006. The severity of late reported property claims that emerged during 2007 was lower than expected and case development, including salvage recoveries, on previously reported claims was better than expected.

•  We experienced favorable development of about $135 million in the run-off of our reinsurance assumed business due primarily to better than expected reported loss activity from cedants.

•  We experienced favorable development of about $40 million in the fidelity class and $30 million in the surety class due to lower than expected reported loss emergence, mainly related to more recent accident years.

•  We experienced favorable development of about $30 million in the personal automobile class. Case development during 2007 on previously reported claims was better than expected, reflecting improved case management. Also, the number of late reported claims was less than expected, reflecting a continuation of recent generally favorable frequency trends.

•  We experienced adverse development of about $20 million in the commercial liability classes. Adverse development in accident years prior to 1997, mostly the $88 million related to asbestos and toxic waste claims, was largely offset by favorable development in these classes in the more recent accident years.

In Item 1 of this report, we present an analysis of our consolidated loss reserve development on a calendar year basis for each of the ten years prior to 2009. The variability in reserve development over the ten year period illustrates the uncertainty of the loss reserving process. Conditions and trends that have affected reserve development in the past will not necessarily recur in the future. It is not appropriate to extrapolate future favorable or unfavorable reserve development based on amounts experienced in prior years.

Our U.S. property and casualty subsidiaries are required to file annual statements with insurance regulatory authorities prepared on an accounting basis prescribed or permitted by such authorities. These annual statements include an analysis of loss reserves, referred to as Schedule P, that presents accident year loss development information by line of business for the nine years prior to 2009. It is our intention to post the Schedule P for our combined U.S. property and casualty subsidiaries on our website as soon as it becomes available.

Investment Results

Property and casualty investment income before taxes decreased by 5% in 2009 compared with 2008 and increased by 2% in 2008 compared with 2007. Lower yields, primarily on short term investments, contributed to the decrease in investment income in 2009. In addition, almost half of the decline in 2009 was related to currency fluctuation on income from our non-U.S. investments. Growth in investment income in 2008 was due to an increase in average invested assets compared with 2007. The growth in investment income in 2009 and 2008 was limited as average invested assets increased only modestly in each year as a result of substantial dividend distributions made by the property and casualty subsidiaries to Chubb during 2009, 2008 and 2007.

The effective tax rate on our investment income was 19.2% in 2009 compared with 20.0% in 2008 and 19.9% in 2007. The effective tax rate fluctuates as a result of our holding a different proportion of our investment portfolio in tax exempt securities during different periods.

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On an after-tax basis, property and casualty investment income decreased by 3% in 2009 and increased by 2% in 2008. The after-tax annualized yield on the investment portfolio that supports our property and casualty insurance business was 3.39% in 2009 compared with 3.49% in 2008 and 3.50% in 2007.

If investment yields and average foreign currency to U.S. dollar exchange rates in 2010 are similar to 2009 year-end levels, property and casualty investment income for 2010 is expected to be about the same as in 2009.

Other Income and Charges

Other income and charges, which includes miscellaneous income and expenses of the property and casualty subsidiaries, was not significant in the last three years.

CORPORATE AND OTHER

Corporate and other comprises investment income earned on corporate invested assets, interest expense and other expenses not allocated to our operating subsidiaries and the results of our non-insurance subsidiaries, including Chubb Financial Solutions, which is in run-off.

Corporate and other produced a loss before taxes of $238 million in 2009 compared with losses of $214 million and $149 million in 2008 and 2007, respectively. The higher loss in 2009 and 2008 compared to the respective prior year was due in both years to increasingly higher interest expense and lower investment income. The higher interest expense was primarily due to an increase in average debt outstanding in both 2009 and 2008 as a result of the issuance of additional debt during 2008 and 2007. The lower investment income was primarily the result of a decrease in the average yield on short term investments. The higher interest expense in 2009 and 2008 was not offset by an increase in investment income as the proceeds from the issuance of the debt were used to repurchase Chubb’s common stock.

Chubb Financial Solutions

Chubb Financial Solutions (CFS) participated in derivative financial instruments and has been in run-off since 2003. Since that date, CFS has terminated early or run-off nearly all of its contractual obligations within its financial products portfolio.

CFS’s aggregate exposure, or retained risk, from each of its remaining in-force financial products contracts is referred to as notional amount. Notional amounts are used to calculate the exchange of contractual cash flows and are not necessarily representative of the potential for gain or loss. The notional amounts are not recorded on the balance sheet.

CFS’s remaining financial products contracts at December 31, 2009 included a derivative contract linked to an equity market index that terminates in 2012 and a few other insignificant transactions. We estimate that the notional amount under the remaining contracts was about $340 million and the fair value of our future obligations was $4 million at December 31, 2009.

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REALIZED INVESTMENT GAINS AND LOSSES

Net realized investment gains and losses were as follows:

	Years Ended December 31
	2009			2008			2007
	(in millions)
Net realized gains (losses)
Fixed maturities	$	72		$	66		$	4
Equity securities		84			32			135
Other invested assets		(21	)		(56	)		344
Harbor Point		—			33			—
		135			75			483
Other-than-temporary impairment losses
Fixed maturities		(23	)		(111	)		(30	)
Equity securities		(89	)		(335	)		(79	)
		(112	)		(446	)		(109	)
Realized investment gains (losses) before tax	$	23		$	(371	)	$	374
Realized investment gains (losses) after tax	$	15		$	(241	)	$	243

Decisions to sell equity securities and fixed maturities are governed principally by considerations of investment opportunities and tax consequences. As a result, realized gains and losses on the sale of these investments may vary significantly from period to period. However, such gains and losses generally have little, if any, impact on shareholders’ equity as all of these investments are carried at fair value, with the unrealized appreciation or depreciation reflected in accumulated other comprehensive income.

A primary reason for the sale of fixed maturities in each of the last three years has been to improve our after-tax portfolio return without sacrificing quality where market opportunities have existed to do so.

The net realized gains and losses on other invested assets represent the aggregate of distributions to us from the limited partnerships in which we have an interest and changes in our equity in the net assets of the partnerships based on valuations provided to us by the manager of each partnership. Due to the timing of our receipt of valuation data from the investment managers, these investments are reported on a one quarter lag.

In 2005, we transferred our ongoing reinsurance business and certain related assets to Harbor Point Limited. In exchange, we received from Harbor Point $200 million of 6% convertible notes and warrants to purchase common stock of Harbor Point. The transaction resulted in a pre-tax gain of $204 million, of which $171 million was recognized in 2005. In 2008, the notes were converted into 2,000,000 shares of common stock of Harbor Point and we recognized the remaining $33 million gain.

We regularly review those invested assets whose fair value is less than cost to determine if an other-than-temporary decline in value has occurred. We have a monitoring process overseen by a committee of investment and accounting professionals that is responsible for identifying those securities to be specifically evaluated for a potential other-than-temporary impairment.

The determination of whether a decline in value of any investment is temporary or other-than-temporary requires the judgment of management. The assessment of other-than-temporary impairment of fixed maturities and equity securities is based on both quantitative criteria and qualitative information and also considers a number of factors including, but not limited to, the length of time and the extent to which the fair value has been less than the cost, the financial condition and near term prospects of the issuer, whether the issuer is current on contractually obligated interest and principal payments, general market conditions and industry or sector specific factors. The decision to recognize a decline in the value

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of a security carried at fair value as other than temporary rather than temporary has no impact on shareholders’ equity.

For fixed maturities, prior to April 1, 2009, we considered many factors including the intent and ability to hold a security for a period of time sufficient to allow for the recovery of the security’s cost. When an impairment was deemed other than temporary, the security was written down to fair value and the entire writedown was included in net income as a realized investment loss. Effective April 1, 2009, the Corporation adopted new guidance issued by the Financial Accounting Standards Board (FASB) related to the recognition and presentation of other-than-temporary impairments. The new guidance modified the previous guidance on the recognition of other-than-temporary impairments of debt securities. Under the new guidance, we are required to recognize an other-than-temporary impairment loss for a fixed maturity when we conclude that we have the intent to sell or it is more likely than not that we will be required to sell an impaired fixed maturity before the security recovers to its amortized cost value or it is likely we will not recover the entire amortized cost value of an impaired security. If we have the intent to sell or it is more likely than not we will be required to sell an impaired fixed maturity before the security recovers to its amortized cost value, the security is written down to fair value and the entire amount of the writedown is included in net income as a realized investment loss. For all other impaired fixed maturities, the impairment loss is separated into the amount representing the credit loss and the amount representing the loss related to all other factors. The amount of the impairment loss that represents the credit loss is included in net income as a realized investment loss and the amount of the impairment loss that relates to all other factors is included in other comprehensive income.

For equity securities, we consider our intent and ability to hold a security for a period of time sufficient to allow us to recover our cost. If a decline in the fair value of an equity security is deemed to be other than temporary, the security is written down to fair value and the amount of the writedown is included in net income as a realized investment loss.

During each of the last three years, particularly during 2008 as a result of the significant financial market disruption, the fair value of some of our investments declined to a level below our cost. Some of these investments were deemed to be other-than-temporarily impaired. The issuers of the equity securities deemed to be other-than-temporarily impaired in each of the last three years were not concentrated within any individual industry or sector. About 75% of the fixed maturities deemed to be other-than-temporarily impaired in 2008 were corporate securities within the financial services sector.

Information related to investment securities in an unrealized loss position at December 31, 2009 and 2008 is included in Note (4)(b) of the Notes to Consolidated Financial Statements.

CAPITAL RESOURCES AND LIQUIDITY

Capital resources and liquidity represent a company’s overall financial strength and its ability to generate cash flows, borrow funds at competitive rates and raise new capital to meet operating and growth needs.

Capital Resources

Capital resources provide protection for policyholders, furnish the financial strength to support the business of underwriting insurance risks and facilitate continued business growth. At December 31, 2009, the Corporation had shareholders’ equity of $15.6 billion and total debt of $4.0 billion.

In March 2007, Chubb issued $1.0 billion of unsecured junior subordinated capital securities. The capital securities will become due on April 15, 2037, the scheduled maturity date, but only to the extent that Chubb has received sufficient net proceeds from the sale of certain qualifying capital securities. Chubb must use its commercially reasonable efforts, subject to certain market disruption events, to sell enough qualifying capital securities to permit repayment of the capital securities on the scheduled maturity date or as soon thereafter as possible. Any remaining outstanding principal amount will be due on March 29, 2067, the final maturity date. The capital securities bear interest at a fixed rate of 6.375%

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through April 14, 2017. Thereafter, the capital securities will bear interest at a rate equal to the three-month LIBOR rate plus 2.25%. Subject to certain conditions, Chubb has the right to defer the payment of interest on the capital securities for a period not exceeding ten consecutive years. During any such period, interest will continue to accrue and Chubb generally may not declare or pay any dividends on or purchase any shares of its capital stock.

In connection with the issuance of the capital securities, Chubb entered into a replacement capital covenant in which it agreed that it will not repay, redeem or purchase the capital securities before March 29, 2047, unless, subject to certain limitations, it has received proceeds from the sale of replacement capital securities, as defined. Subject to the replacement capital covenant, the capital securities may be redeemed, in whole or in part, at any time on or after April 15, 2017 at a redemption price equal to the principal amount plus any accrued interest on or prior to April 15, 2017 at a redemption price equal to the greater of (i) the principal amount or (ii) a make-whole amount, in each case plus any accrued interest.

Chubb also has outstanding $400 million of 6% notes due in 2011, $275 million of 5.2% notes due in 2013, $600 million of 5.75% notes and $100 million of 6.6% debentures due in 2018, $200 million of 6.8% debentures due in 2031, $800 million of 6% notes due in 2037 and $600 million of 6.5% notes due in 2038, all of which are unsecured.

Management regularly monitors the Corporation’s capital resources. In connection with our long term capital strategy, Chubb from time to time contributes capital to its property and casualty subsidiaries. In addition, in order to satisfy capital needs as a result of any rating agency capital adequacy or other future rating issues, or in the event we were to need additional capital to make strategic investments in light of market opportunities, we may take a variety of actions, which could include the issuance of additional debt and/or equity securities. We believe that our strong financial position and conservative debt level provide us with the flexibility and capacity to obtain funds externally through debt or equity financings on both a short term and long term basis.

In December 2006, the Board of Directors authorized the repurchase of up to 20,000,000 shares of Chubb’s common stock. In March 2007, the Board of Directors authorized an increase of 20,000,000 shares to the December 2006 authorization. In December 2007 and December 2008, the Board of Directors authorized the repurchase of up to an additional 28,000,000 shares and 20,000,000 shares, respectively, of common stock. As of December 31, 2009, no shares remained under these share repurchase authorizations. In December 2009, the Board of Directors authorized the repurchase of up to an additional 25,000,000 shares of common stock.

In 2007, we repurchased 41,733,268 shares of Chubb’s common stock in open market transactions at a cost of $2,184 million. In 2008, we repurchased 26,328,770 shares of Chubb’s common stock in open market transactions at a cost of $1,311 million. In 2009, we repurchased 22,623,775 shares of Chubb’s common stock in open market transactions at a cost of $1,065 million. As of December 31, 2009, 22,160,125 shares remained under the December 2009 share repurchase authorization, which has no expiration date. Based on our outlook for 2010, we expect to repurchase all of the shares remaining under the December 2009 authorization by the end of 2010, subject to market conditions.

Ratings

Chubb and its insurance subsidiaries are rated by major rating agencies. These ratings reflect the rating agency’s opinion of our financial strength, operating performance, strategic position and ability to meet our obligations to policyholders.

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Credit ratings assess a company’s ability to make timely payments of interest and principal on its debt. The following table summarizes the Corporation’s credit ratings from the major independent rating organizations as of February 24, 2010.

	A.M. Best	Standard & Poor’s	Moody’s	Fitch
Senior unsecured debt	aa-	A+	A2	A+
Junior subordinated capital securities	a	A-	A3	A-
Commercial paper	AMB-1+	A-1	P-1	F1+

Financial strength ratings assess an insurer’s ability to meet its financial obligations to policyholders. The following table summarizes our property and casualty subsidiaries’ financial strength ratings from the major independent rating organizations as of February 24, 2010.

	A.M. Best	Standard & Poor’s	Moody’s	Fitch
Financial strength	A++	AA	Aa2	AA

Ratings are an important factor in establishing our competitive position in the insurance markets. There can be no assurance that our ratings will continue for any given period of time or that they will not be changed.

It is possible that one or more of the rating agencies may raise or lower our existing ratings in the future. If our credit ratings were downgraded, we might incur higher borrowing costs and might have more limited means to access capital. A downgrade in our financial strength ratings could adversely affect the competitive position of our insurance operations, including a possible reduction in demand for our products in certain markets.

Liquidity

Liquidity is a measure of a company’s ability to generate sufficient cash flows to meet the short and long term cash requirements of its business operations.

The Corporation’s liquidity requirements in the past have generally been met by funds from operations and we expect that in the future funds from operations will continue to be sufficient to meet such requirements. Liquidity requirements could also be met by funds received upon the maturity or sale of marketable securities in our investment portfolio. The Corporation also has the ability to borrow under its credit facility and we believe we could issue debt or equity securities.

Our property and casualty operations provide liquidity in that premiums are generally received months or even years before losses are paid under the policies purchased by such premiums. Historically, cash receipts from operations, consisting of insurance premiums and investment income, have provided more than sufficient funds to pay losses, operating expenses and dividends to Chubb. After satisfying our cash requirements, excess cash flows are used to build the investment portfolio and thereby increase future investment income.

Our strong underwriting results continued to generate substantial new cash in 2009. New cash from operations available for investment by the property and casualty subsidiaries was approximately $1.3 billion in 2009 compared with $775 million in 2008 and $1.6 billion in 2007. New cash available in 2009 was higher than in 2008 due to an $800 million decrease in dividends paid by the property and casualty subsidiaries to Chubb and lower loss payments, partially offset by lower premium collections and higher income tax payments. New cash available in 2008 was lower than in 2007 due to a $450 million increase in dividends paid by the property and casualty subsidiaries to Chubb and higher loss payments, partially offset by lower income tax payments.

Our property and casualty subsidiaries maintain substantial investments in highly liquid, short term marketable securities. Accordingly, we do not anticipate selling long term fixed maturity investments to meet any liquidity needs.

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Chubb’s liquidity requirements primarily include the payment of dividends to shareholders and interest and principal on debt obligations. The declaration and payment of future dividends to Chubb’s shareholders will be at the discretion of Chubb’s Board of Directors and will depend upon many factors, including our operating results, financial condition, capital requirements and any regulatory constraints.

As a holding company, Chubb’s ability to continue to pay dividends to shareholders and to satisfy its debt obligations relies on the availability of liquid assets, which is dependent in large part on the dividend paying ability of its property and casualty subsidiaries. The timing and amount of dividends paid by the property and casualty subsidiaries to Chubb may vary from year to year. Our property and casualty subsidiaries are subject to laws and regulations in the jurisdictions in which they operate that restrict the amount of dividends they may pay without the prior approval of regulatory authorities. The restrictions are generally based on net income and on certain levels of policyholders’ surplus as determined in accordance with statutory accounting practices. Dividends in excess of such thresholds are considered “extraordinary” and require prior regulatory approval. During 2009, 2008 and 2007, these subsidiaries paid dividends to Chubb of $1.2 billion, $2.0 billion and $1.55 billion, respectively. The maximum dividend distribution that may be made by the property and casualty subsidiaries to Chubb during 2010 without prior regulatory approval is approximately $1.5 billion.

Chubb has a revolving credit agreement with a group of banks that provides for up to $500 million of unsecured borrowings. There have been no borrowings under this agreement. Various interest rate options are available to Chubb, all of which are based on market interest rates. The agreement contains customary restrictive covenants including a covenant to maintain a minimum consolidated shareholders’ equity, as adjusted. At December 31, 2009, Chubb was in compliance with all such covenants. The revolving credit facility is available for general corporate purposes and to support our commercial paper borrowing arrangement. The agreement has a termination date of October 19, 2012. Under the agreement Chubb is permitted to request on two occasions, at any time during the remaining term of the agreement, an extension of the maturity date for an additional one year period. On the termination date of the agreement, any borrowings then outstanding become payable.

Contractual Obligations and Off-Balance Sheet Arrangements

The following table provides our future payments due by period under contractual obligations as of December 31, 2009, aggregated by type of obligation.

			2011		2013
			and		and		There-
	2010		2012		2014		after		Total
	(in millions)
Principal due under long term debt	$	—	$	400	$	275	$	3,300	$	3,975
Interest payments on long term debt(a)		244		463		418		3,034		4,159
Future minimum rental payments under operating leases		72		123		91		110		396
		316		986		784		6,444		8,530
Loss and loss expense reserves(b)		5,025		6,395		3,654		7,765		22,839
Total	$	5,341	$	7,381	$	4,438	$	14,209	$	31,369

(a) Junior subordinated capital securities of $1 billion bear interest at a fixed rate of 6.375% through April 14, 2017 and at a rate equal to the three-month LIBOR rate plus 2.25% thereafter. For purposes of the above table, interest after April 14, 2017 was calculated using the three-month LIBOR rate as of December 31, 2009. The table includes future interest payments through the scheduled maturity date, April 15, 2037. Interest payments for the period from the scheduled maturity date through the final maturity date, March 29, 2067, would increase the contractual obligation by $750 million. It is our expectation that the capital securities will be redeemed at the end of the fixed interest rate period.

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(b) There is typically no stated contractual commitment associated with property and casualty insurance loss reserves. The obligation to pay a claim arises only when a covered loss event occurs and a settlement is reached. The vast majority of our loss reserves relate to claims for which settlements have not yet been reached. Our loss reserves therefore represent estimates of future payments. These estimates are dependent on the outcome of claim settlements that will occur over many years. Accordingly, the payment of the loss reserves is not fixed as to either amount or timing. The estimate of the timing of future payments is based on our historical loss payment patterns. The ultimate amount and timing of loss payments will likely differ from our estimate and the differences could be material. We expect that these loss payments will be funded, in large part, by future cash receipts from operations.

The above table excludes certain commitments totaling $850 million at December 31, 2009 to fund limited partnership investments. These commitments can be called by the partnerships (generally over a period of five years or less), if and when needed by the partnerships to fund certain partnership expenses or the purchase of investments. It is uncertain whether and, if so, when we will be required to fund these commitments. There is no predetermined payment schedule.

The Corporation does not have any off-balance sheet arrangements that are reasonably likely to have a material effect on the Corporation’s financial condition, results of operations, liquidity or capital resources, other than as disclosed in Note (16) of the Notes to Consolidated Financial Statements.

INVESTED ASSETS

The main objectives in managing our investment portfolios are to maximize after-tax investment income and total investment returns while minimizing credit risks in order to ensure that funds will be available to meet our insurance obligations. Investment strategies are developed based on many factors including underwriting results and our resulting tax position, regulatory requirements, fluctuations in interest rates and consideration of other market risks. Investment decisions are centrally managed by investment professionals based on guidelines established by management and approved by the boards of directors of Chubb and its respective operating companies.

Our investment portfolio primarily comprises high quality bonds, principally tax exempt securities, corporate issues, mortgage-backed securities and U.S. Treasury securities, as well as foreign government and corporate bonds that support our operations outside the United States. The portfolio also includes equity securities, primarily publicly traded common stocks, and other invested assets, primarily private equity limited partnerships, all of which are held with the primary objective of capital appreciation.

Limited partnership investments by their nature are less liquid and involve more risk than other investments. We actively manage our risk through type of asset class and domestic and international diversification. At December 31, 2009, we had investments in about 90 separate partnerships. We review the performance of these investments on a quarterly basis and we obtain audited financial statements annually.

In our U.S. operations, during 2009 and 2008, we invested new cash in tax exempt bonds and taxable bonds. The taxable bonds we invested in were corporate bonds while we reduced our holdings of mortgage-backed securities. In 2007, we invested new cash in tax exempt bonds and, to a lesser extent, taxable bonds, equity securities and limited partnerships. The taxable bonds we invested in were corporate bonds and mortgage-backed securities while we reduced our holdings of U.S. Treasury securities. Our objective is to achieve the appropriate mix of taxable and tax exempt securities in our portfolio to balance both investment and tax strategies. At December 31, 2009, 67% of our U.S. fixed maturity portfolio was invested in tax exempt bonds compared with 69% at December 31, 2008 and 67% at December 31, 2007.

We classify our fixed maturity securities, which may be sold prior to maturity to support our investment strategies, such as in response to changes in interest rates and the yield curve or to maximize

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after-tax returns, as available-for-sale. Fixed maturities classified as available-for-sale are carried at fair value.

Changes in the general interest rate environment affect the returns available on new fixed maturity investments. While a rising interest rate environment enhances the returns available on new investments, it reduces the fair value of existing fixed maturity investments and thus the availability of gains on disposition. A decline in interest rates reduces the returns available on new investments but increases the fair value of existing investments, creating the opportunity for realized investment gains on disposition.

The net unrealized appreciation before tax of our fixed maturities and equity securities carried at fair value was $1,606 million at December 31, 2009 compared with net unrealized depreciation of $220 million at December 31, 2008 and net unrealized appreciation of $810 million at December 31, 2007. Such unrealized appreciation and depreciation is reflected in accumulated other comprehensive income, net of applicable deferred income taxes.

Credit spreads, which refer to the difference between a risk-free yield (the yield on U.S. Treasury securities) and the actual yields on all other fixed maturity investments, decreased significantly for almost all fixed maturity investments during 2009 due to improvements in the financial markets. This resulted in an increase in the fair value of many of our fixed maturity investments. The fair value of our equity investments also increased in 2009 due to the improvements in the financial markets. During 2008, credit spreads increased significantly due to declines in the financial markets. This resulted in the decrease in the fair value of many of our fixed maturity investments. The fair value of our equity securities also decreased in 2008 due to the weakness in the financial markets.

FAIR VALUES OF FINANCIAL INSTRUMENTS

Fair values of financial instruments are determined using valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Fair values are generally measured using quoted prices in active markets for identical assets or liabilities or other inputs, such as quoted prices for similar assets or liabilities that are observable, either directly or indirectly. In those instances where observable inputs are not available, fair values are measured using unobservable inputs for the asset or liability. Unobservable inputs reflect our own assumptions about the assumptions that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. Fair value estimates derived from unobservable inputs are affected by the assumptions used, including the discount rates and the estimated amounts and timing of future cash flows. The derived fair value estimates cannot be substantiated by comparison to independent markets and are not necessarily indicative of the amounts that would be realized in a current market exchange.

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:

Level 1 — Unadjusted quoted prices in active markets for identical assets.

Level 2 — Other inputs that are observable for the asset, either directly or indirectly.

Level 3 — Inputs that are unobservable.

The methods and assumptions used to estimate the fair values of financial instruments are as follows:

Fair values for fixed maturities are determined by management, utilizing prices obtained from an independent, nationally recognized pricing service or, in the case of securities for which prices are not provided by a pricing service, from independent brokers. For fixed maturities that have quoted prices in active markets, market quotations are provided. For fixed maturities that do not trade on a daily basis, the pricing service and brokers provide fair value estimates using a variety of inputs including, but not limited to, benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, reference data, prepayment spreads and measures of volatility. Management reviews on an ongoing basis the reasonableness of the methodologies used by the relevant pricing service and brokers. In addition, management, using the prices received for the securities from the pricing service and brokers,

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determines the aggregate portfolio price performance and reviews it against applicable indices. If management believes that significant discrepancies exist, it will discuss these with the relevant pricing service or broker to resolve the discrepancies.

Fair values of equity securities are based on quoted market prices.

The carrying value of short term investments approximates fair value due to the short maturities of these investments.

Fair values of long term debt issued by Chubb are determined by management, utilizing prices obtained from an independent, nationally recognized pricing service.

We use a pricing service to estimate fair value measurements for approximately 99% of our fixed maturities. The prices we obtain from a pricing service and brokers generally are non-binding, but are reflective of current market transactions in the applicable financial instruments. At December 31, 2009, we did not hold financial instruments in our investment portfolio for which a lack of market liquidity impacted our determination of fair value.

The methods and assumptions used to estimate the fair value of the Corporation’s pension plan and other postretirement benefit plan assets, other than assets invested in pooled funds, are similar to the methods and assumptions used for our other financial instruments. The fair value of pooled funds is based on the net asset value of the funds. Approximately 99% of the pension plan and other postretirement benefit plan assets are categorized as Level 1 or Level 2 in the fair value hierarchy.

PENSION AND OTHER POSTRETIREMENT BENEFITS

As a result of the improvement in the financial markets in 2009, the fair value of the assets in our pension and other postretirement benefit plans increased, improving the funded status of these plans. Postretirement benefit costs not recognized in net income decreased by $134 million, which was reflected in other comprehensive income, net of applicable deferred income taxes. During 2008, the fair value of the assets in our pension and other postretirement benefit plans decreased significantly as a result of the turmoil in the financial markets. Due primarily to this decline, postretirement benefit costs not yet recognized in net income increased by $437 million, which was reflected in other comprehensive income, net of applicable deferred income taxes.

Employee benefits are discussed further in Note (13) of the Notes to Consolidated Financial Statements.

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the potential for loss due to adverse changes in the fair value of financial instruments. Our primary exposure to market risks relates to our investment portfolio, which is sensitive to changes in interest rates and, to a lesser extent, credit quality, prepayment, foreign currency exchange rates and equity prices. We also have exposure to market risks through our debt obligations. Analytical tools and monitoring systems are in place to assess each of these elements of market risk.

Investment Portfolio

Interest rate risk is the price sensitivity of a security that promises a fixed return to changes in interest rates. When market interest rates rise, the fair value of our fixed income securities decreases. We view the potential changes in price of our fixed income investments within the overall context of asset and liability management. Our actuaries estimate the payout pattern of our liabilities, primarily our property and casualty loss reserves, to determine their duration. Expressed in years, duration is the weighted average payment period of cash flows, where the weighting is based on the present value of the cash flows. We set duration targets for our fixed income investment portfolios after consideration of the estimated duration of these liabilities and other factors, which allows us to prudently manage the overall effect of interest rate risk for the Corporation.

62

The following table provides information about our fixed maturity investments, which are sensitive to changes in interest rates. The table presents cash flows of principal amounts and related weighted average interest rates by expected maturity dates at December 31, 2009 and 2008. Consideration is given to the call dates of securities trading above par value and the expected prepayment patterns of mortgage-backed securities. Actual cash flows could differ from the expected amounts, primarily due to future changes in interest rates.

	At December 31, 2009
																			Total
																There-			Amortized		Fair
	2010			2011			2012			2013			2014			after			Cost		Value
	(in millions)
Tax exempt	$	1,155		$	1,231		$	1,673		$	2,862		$	2,168		$	9,631		$	18,720	$	19,587
Average interest rate		4.6	%		4.3	%		4.2	%		4.1	%		4.1	%		4.4	%
Taxable — other than mortgage-backed securities		1,054			1,431			2,348			1,688			1,589			4,836			12,946		13,461
Average interest rate		5.0	%		4.1	%		4.1	%		4.2	%		4.6	%		5.1	%
Mortgage-backed securities		536			651			693			731			408			505			3,524		3,530
Average interest rate		4.7	%		4.9	%		5.0	%		5.3	%		5.3	%		5.1	%
Total	$	2,745		$	3,313		$	4,714		$	5,281		$	4,165		$	14,972		$	35,190	$	36,578

	At December 31, 2008
																			Total
																There-			Amortized		Fair
	2009			2010			2011			2012			2013			after			Cost		Value
	(in millions)
Tax exempt	$	1,102		$	874		$	1,385		$	1,641		$	2,717		$	10,580		$	18,299	$	18,345
Average interest rate		5.1	%		4.7	%		4.3	%		4.1	%		4.1	%		4.3	%
Taxable — other than mortgage-backed securities		768			1,101			1,225			1,429			1,560			4,329			10,412		10,645
Average interest rate		5.2	%		4.9	%		4.9	%		5.1	%		4.5	%		5.0	%
Mortgage-backed securities		580			551			669			702			738			940			4,180		3,765
Average interest rate		4.7	%		4.6	%		4.9	%		5.0	%		5.4	%		5.1	%
Total	$	2,450		$	2,526		$	3,279		$	3,772		$	5,015		$	15,849		$	32,891	$	32,755

Our tax exempt bond and taxable bond portfolios each have an average expected maturity of five years.

Credit risk is the potential loss resulting from adverse changes in the issuer’s ability to repay the debt obligation. We have consistently invested in high quality marketable securities. Only about 1% of our bond portfolio is below investment grade. Our investment portfolio does not have any direct exposure to either sub-prime mortgages or collateralized debt obligations.

About 80% of our tax exempt bonds are rated AA or better by Moody’s or Standard and Poor’s with about 25% rated AAA. The average rating of our tax exempt bonds is AA. While about 40% of our tax exempt bonds are insured, the effect of insurance on the average credit rating of these bonds is insignificant. The insured tax exempt bonds in our portfolio have been selected based on the quality of the underlying credit and not the value of the credit insurance enhancement.

About 65% of the taxable bonds, other than mortgage-backed securities, in our portfolio are issued by the U.S. Treasury or U.S. government agencies or by foreign governments or are rated AA or better.

63

Mortgage-backed securities comprised 21% of our taxable bond portfolio at year-end 2009. About 97% of the mortgage-backed securities are rated AAA, and of the remaining 3%, about half are investment grade. Of the AAA rated securities, 53% are residential mortgage-backed securities, consisting of government agency pass-through securities guaranteed by a government agency or a government sponsored enterprise (GSE), GSE collateralized mortgage obligations (CMOs) and other CMOs, all backed by single family home mortgages. The majority of the CMOs are actively traded in liquid markets. The other 47% of the AAA rated securities are call protected, commercial mortgage-backed securities (CMBS). About 90% of our CMBS are senior securities with the highest level of subordination. The remainder of our CMBS are seasoned securities that were issued in 2004 or earlier.

Prepayment risk refers to the changes in prepayment patterns related to decreases and increases in interest rates that can either shorten or lengthen the expected timing of the principal repayments and thus the average life of a security, potentially reducing or increasing its effective yield. Such risk exists primarily within our portfolio of residential mortgage-backed securities. We monitor such risk regularly.

Foreign currency risk is the sensitivity to foreign exchange rate fluctuations of the fair value and investment income related to foreign currency denominated financial instruments. The functional currency of our foreign operations is generally the currency of the local operating environment since business is primarily transacted in such local currency. We seek to mitigate the risks relating to currency fluctuations by generally maintaining investments in those foreign currencies in which our property and casualty subsidiaries have loss reserves and other liabilities, thereby limiting exchange rate risk to the net assets denominated in foreign currencies.

At December 31, 2009, the property and casualty subsidiaries held foreign currency denominated investments of $7.4 billion supporting our international operations. The principal currencies creating foreign exchange rate risk for the property and casualty subsidiaries are the euro, the Canadian dollar and the British pound sterling. The following table provides information about those fixed maturity investments that are denominated in these currencies. The table presents cash flows of principal amounts in U.S. dollar equivalents by expected maturity dates at December 31, 2009. Actual cash flows could differ from the expected amounts.

	At December 31, 2009
													Total
											There-		Amortized		Fair
	2010		2011		2012		2013		2014		after		Cost		Value
	(in millions)
Euro	$	103	$	155	$	343	$	273	$	219	$	660	$	1,753	$	1,823
Canadian dollar		109		325		226		178		187		702		1,727		1,794
British pound sterling		128		221		323		231		254		562		1,719		1,783

Equity price risk is the potential loss in fair value of our equity securities resulting from adverse changes in stock prices. In general, equities have more year-to-year price variability than intermediate term high grade bonds. However, returns over longer time frames have been consistently higher. Our publicly traded equity securities are high quality, diversified across industries and readily marketable. A hypothetical decrease of 10% in the market price of each of the equity securities held at December 31, 2009 and 2008 would have resulted in a decrease of $143 million and $148 million, respectively, in the fair value of the equity securities portfolio.

All of the above risks are monitored on an ongoing basis. A combination of in-house systems and proprietary models and externally licensed software are used to analyze individual securities as well as each portfolio. These tools provide the portfolio managers with information to assist them in the evaluation of the market risks of the portfolio.

64

Debt

We also have interest rate risk on our debt obligations. The following table presents expected cash flow of principal amounts and related weighted average interest rates by maturity date of our long term debt obligations at December 31, 2009.

	At December 31, 2009
													There-					Fair
	2010		2011			2012		2013			2014		after			Total		Value
	(in millions)
Expected cash flows of principal amounts	$	—	$	400		$	—	$	275		$	—	$	3,300		$	3,975	$	4,102
Average interest rate		—		6.0	%		—		5.2	%		—		6.2	%

Item 8.   Consolidated Financial Statements and Supplementary Data

Consolidated financial statements of the Corporation at December 31, 2009 and 2008 and for each of the three years in the period ended December 31, 2009 and the report thereon of our independent registered public accounting firm, and the Corporation’s unaudited quarterly financial data for the two-year period ended December 31, 2009 are listed in Item 15(a) of this report.

Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.   Controls and Procedures

As of December 31, 2009, an evaluation of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) was performed under the supervision and with the participation of the Corporation’s management, including Chubb’s chief executive officer and chief financial officer. Based on that evaluation, the chief executive officer and chief financial officer concluded that the Corporation’s disclosure controls and procedures were effective as of December 31, 2009.

During the three month period ended December 31, 2009, there were no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

65

Management’s Report on Internal Control over Financial Reporting

Management of the Corporation is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. The Corporation’s internal control over financial reporting was designed under the supervision of and with the participation of the Corporation’s management, including Chubb’s chief executive officer and chief financial officer, to provide reasonable assurance regarding the reliability of the Corporation’s financial reporting and the preparation and fair presentation of published financial statements in accordance with U.S. generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management conducted an assessment of the effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2009. In making this assessment, management used the framework set forth in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that, as of December 31, 2009, the Corporation’s internal control over financial reporting is effective.

The Corporation’s internal control over financial reporting as of December 31, 2009 has been audited by Ernst & Young LLP, the independent registered public accounting firm who also audited the Corporation’s consolidated financial statements. Their attestation report on the Corporation’s internal control over financial reporting is shown on page 67.

Item 9B.  Other Information

None.

66

Report of Independent Registered Public Accounting Firm

Ernst & Young LLP

5 Times Square

New York, New York 10036

The Board of Directors and Shareholders

The Chubb Corporation

We have audited The Chubb Corporation’s internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Chubb Corporation’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Corporation’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, The Chubb Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of The Chubb Corporation as of December 31, 2009 and 2008, and the related consolidated statements of income, shareholders’ equity, cash flows and comprehensive income for each of the three years in the period ended December 31, 2009, and our report dated February 26, 2010 expressed an unqualified opinion thereon.

/s/  Ernst & Young LLP

February 26, 2010

67

PART III.

Item 10.  Directors and Executive Officers of the Registrant

Information regarding Chubb’s directors is incorporated by reference from Chubb’s definitive Proxy Statement for the 2010 Annual Meeting of Shareholders under the caption “Our Board of Directors.” Information regarding Chubb’s executive officers is included in Part I of this report under the caption “Executive Officers of the Registrant.” Information regarding Section 16 reporting compliance of Chubb’s directors, executive officers and 10% beneficial owners is incorporated by reference from Chubb’s definitive Proxy Statement for the 2010 Annual Meeting of Shareholders under the caption “Section 16(a) Beneficial Ownership Reporting Compliance.” Information regarding Chubb’s Code of Ethics for CEO and Senior Financial Officers is included in Item 1 of this report under the caption “Business — General.” Information regarding the Audit Committee of Chubb’s Board of Directors and its Audit Committee financial experts is incorporated by reference from Chubb’s definitive Proxy Statement for the 2010 Annual Meeting of Shareholders under the captions “Corporate Governance — Audit Committee,” “Audit Committee Report” and “Committee Assignments.”

Item 11.  Executive Compensation

Incorporated by reference from Chubb’s definitive Proxy Statement for the 2010 Annual Meeting of Shareholders, under the captions “Corporate Governance — Compensation Committee Interlocks and Insider Participation,” “Corporate Governance — Directors’ Compensation,” “Compensation Committee Report,” “Compensation Discussion and Analysis” and “Executive Compensation.”

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Incorporated by reference from Chubb’s definitive Proxy Statement for the 2010 Annual Meeting of Shareholders, under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information.”

Item 13.  Certain Relationships and Related Transactions

Incorporated by reference from Chubb’s definitive Proxy Statement for the 2010 Annual Meeting of Shareholders, under the captions “Corporate Governance — Director Independence” and “Certain Transactions and Other Matters.”

Item 14.  Principal Accountant Fees and Services

Incorporated by reference from Chubb’s definitive Proxy Statement for the 2010 Annual Meeting of Shareholders, under the caption “Proposal 2: Ratification of Appointment of Independent Auditor.”

68

PART IV.

Item 15.  Exhibits, Financial Statements and Schedules

The financial statements and schedules listed in the accompanying index to financial statements and financial statement schedules are filed as part of this report.

The exhibits listed in the accompanying index to exhibits are filed as part of this report.

69

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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

            (Registrant)

February 25, 2010

     By  /s/  John D. Finnegan

(John D. Finnegan Chairman, President and

Chief Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  John D. Finnegan (John D. Finnegan)	Chairman, President, Chief Executive Officer and Director	February 25, 2010
/s/  Zoë Baird (Zoë Baird)	Director	February 25, 2010
/s/  Sheila P. Burke (Sheila P. Burke)	Director	February 25, 2010
/s/  James I. Cash, Jr. (James I. Cash, Jr.)	Director	February 25, 2010
/s/  Joel J. Cohen (Joel J. Cohen)	Director	February 25, 2010
/s/  Klaus J. Mangold (Klaus J. Mangold)	Director	February 25, 2010
/s/  Martin G. McGuinn (Martin G. McGuinn)	Director	February 25, 2010

70

Signature	Title	Date
/s/  Lawrence M. Small (Lawrence M. Small)	Director	February 25, 2010
/s/  Jess Søderberg (Jess Søderberg)	Director	February 25, 2010
/s/  Daniel E. Somers (Daniel E. Somers)	Director	February 25, 2010
/s/  Karen Hastie Williams (Karen Hastie Williams)	Director	February 25, 2010
/s/  James M. Zimmerman (James M. Zimmerman)	Director	February 25, 2010
/s/  Alfred W. Zollar (Alfred W. Zollar)	Director	February 25, 2010
/s/  Richard G. Spiro (Richard G. Spiro)	Executive Vice President and Chief Financial Officer	February 25, 2010
/s/  John J. Kennedy (John J. Kennedy)	Senior Vice President and Chief Accounting Officer	February 25, 2010

71

THE CHUBB CORPORATION

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

(Item 15(a))

		Form 10-K
		Page
Report of Independent Registered Public Accounting Firm			F-2
Consolidated Statements of Income for the Years Ended December 31, 2009, 2008 and 2007			F-3
Consolidated Balance Sheets at December 31, 2009 and 2008			F-4
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2009, 2008 and 2007			F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007			F-6
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2009, 2008 and 2007			F-7
Notes to Consolidated Financial Statements			F-8
Supplementary Information (unaudited)
Quarterly Financial Data			F-32
Schedules:
I —	Consolidated Summary of Investments — Other than Investments in Related Parties at December 31, 2009		S-1
II —	Condensed Financial Information of Registrant at December 31, 2009 and 2008 and for the Years Ended December 31, 2009, 2008 and 2007		S-2
III —	Consolidated Supplementary Insurance Information at and for the Years Ended December 31, 2009, 2008 and 2007		S-5

All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements and notes thereto.

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ERNST & YOUNG LLP
5 Times Square
New York, New York 10036

The Board of Directors and Shareholders
The Chubb Corporation

We have audited the accompanying consolidated balance sheets of The Chubb Corporation as of December 31, 2009 and 2008, and the related consolidated statements of income, shareholders’ equity, cash flows and comprehensive income for each of the three years in the period ended December 31, 2009. Our audits also included the financial statement schedules listed in the Index at Item 15(a). These financial statements and schedules are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Chubb Corporation at December 31, 2009 and 2008, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2009, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), The Chubb Corporation’s internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2010 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

February 26, 2010

F-2

THE CHUBB CORPORATION

Consolidated Statements of Income

	In Millions,
	Except For Per Share Amounts
	Years Ended December 31
	2009			2008			2007
Revenues
Premiums Earned	$	11,331		$	11,828		$	11,946
Investment Income		1,649			1,732			1,738
Other Revenues		13			32			49
Realized Investment Gains (Losses), Net
Total Other-Than-Temporary Impairment Losses on Investments		(132	)		(446	)		(109	)
Other-Than-Temporary Impairment Losses on Investments Recognized in Other Comprehensive Income		20			—			—
Other Realized Investment Gains, Net		135			75			483
Total Realized Investment Gains (Losses), Net		23			(371	)		374
TOTAL REVENUES		13,016			13,221			14,107
Losses and Expenses
Losses and Loss Expenses		6,268			6,898			6,299
Amortization of Deferred Policy Acquisition Costs		3,021			3,123			3,092
Other Insurance Operating Costs and Expenses		416			441			444
Investment Expenses		39			32			35
Other Expenses		16			36			48
Corporate Expenses		294			284			252
TOTAL LOSSES AND EXPENSES		10,054			10,814			10,170
INCOME BEFORE FEDERAL AND FOREIGN INCOME TAX		2,962			2,407			3,937
Federal and Foreign Income Tax		779			603			1,130
NET INCOME	$	2,183		$	1,804		$	2,807
Net Income Per Share
Basic	$	6.24		$	5.00		$	7.13
Diluted		6.18			4.92			7.01

See accompanying notes.

F-3

THE CHUBB CORPORATION

Consolidated Balance Sheets

	In Millions
	December 31
	2009			2008
Assets
Invested Assets
Short Term Investments	$	1,918		$	2,478
Fixed Maturities
Tax Exempt (cost $18,720 and $18,299)		19,587			18,345
Taxable (cost $16,470 and $14,592)		16,991			14,410
Equity Securities (cost $1,215 and $1,563)		1,433			1,479
Other Invested Assets		2,075			2,026
TOTAL INVESTED ASSETS		42,004			38,738
Cash		51			56
Accrued Investment Income		460			435
Premiums Receivable		2,101			2,201
Reinsurance Recoverable on Unpaid Losses and Loss Expenses		2,053			2,212
Prepaid Reinsurance Premiums		308			373
Deferred Policy Acquisition Costs		1,533			1,532
Deferred Income Tax		272			1,144
Goodwill		467			467
Other Assets		1,200			1,271
TOTAL ASSETS	$	50,449		$	48,429
Liabilities
Unpaid Losses and Loss Expenses	$	22,839		$	22,367
Unearned Premiums		6,153			6,367
Long Term Debt		3,975			3,975
Dividend Payable to Shareholders		118			118
Accrued Expenses and Other Liabilities		1,730			2,170
TOTAL LIABILITIES		34,815			34,997
Commitments and Contingent Liabilities (Note 7 and 16)
Shareholders’ Equity
Preferred Stock — Authorized 8,000,000 Shares; $1 Par Value; Issued — None		—			—
Common Stock — Authorized 1,200,000,000 Shares; $1 Par Value; Issued 371,980,460 and 371,980,710 Shares		372			372
Paid-In Surplus		224			253
Retained Earnings		16,235			14,509
Accumulated Other Comprehensive Income (Loss)		720			(735	)
Treasury Stock, at Cost — 39,972,796 and 19,726,097 Shares		(1,917	)		(967	)
TOTAL SHAREHOLDERS’ EQUITY		15,634			13,432
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	50,449		$	48,429

See accompanying notes.

F-4

THE CHUBB CORPORATION

Consolidated Statements of Shareholders’ Equity

	In Millions
	Years Ended December 31
	2009			2008			2007
Preferred Stock
Balance, Beginning and End of Year	$	—		$	—		$	—
Common Stock
Balance, Beginning of Year		372			375			411
Repurchase of Shares		—			(4	)		(42	)
Shares Issued Under Stock-Based Employee Compensation Plans		—			1			6
Balance, End of Year		372			372			375
Paid-In Surplus
Balance, Beginning of Year		253			346			1,539
Repurchase of Shares		—			(114	)		(1,361	)
Changes Related to Stock-Based Employee Compensation (includes tax benefit of $6, $32, and $16)		(29	)		21			168
Balance, End of Year		224			253			346
Retained Earnings
Balance, Beginning of Year		14,509			13,280			11,711
Cumulative Effect, as of April 1, 2009, of Change in Accounting Principle, Net of Tax		30			—			—
Net Income		2,183			1,804			2,807
Dividends Declared (per share $1.40, $1.32 and $1.16)		(487	)		(479	)		(457	)
Repurchase of Shares		—			(96	)		(781	)
Balance, End of Year		16,235			14,509			13,280
Accumulated Other Comprehensive Income (Loss)
Unrealized Appreciation (Depreciation) of Investments Including Unrealized Other-Than-Temporary Impairment Losses
Balance, Beginning of Year		(143	)		526			392
Cumulative Effect, as of April 1, 2009, of Change in Accounting Principle, Net of Tax		(30	)		—			—
Change During Year, Net of Tax		1,217			(669	)		134
Balance, End of Year		1,044			(143	)		526
Foreign Currency Translation Gains (Losses)
Balance, Beginning of Year		(10	)		216			91
Change During Year, Net of Tax		170			(226	)		125
Balance, End of Year		160			(10	)		216
Postretirement Benefit Costs Not Yet Recognized in Net Income
Balance, Beginning of Year		(582	)		(298	)		(281	)
Change During Year, Net of Tax		98			(284	)		(17	)
Balance, End of Year		(484	)		(582	)		(298	)
Accumulated Other Comprehensive Income (Loss), End of Year		720			(735	)		444
Treasury Stock, at Cost
Balance, Beginning of Year		(967	)		—			—
Repurchase of Shares		(1,065	)		(1,097	)		—
Shares Issued Under Stock-Based Employee Compensation Plans		115			130			—
Balance, End of Year		(1,917	)		(967	)		—
TOTAL SHAREHOLDERS’ EQUITY	$	15,634		$	13,432		$	14,445

See accompanying notes.

F-5

     THE CHUBB CORPORATION

      Consolidated Statements of Cash Flows

	In Millions
	Years Ended December 31
	2009			2008			2007
Cash Flows from Operating Activities
Net Income	$	2,183		$	1,804		$	2,807
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
Increase in Unpaid Losses and Loss Expenses, Net		262			389			350
Decrease in Unearned Premiums, Net		(254	)		(46	)		(74	)
Decrease in Premiums Receivable		100			26			87
Decrease in Reinsurance Recoverable on Paid Losses		6			148			258
Amortization of Premiums and Discounts on Fixed Maturities		186			206			233
Depreciation		69			64			69
Realized Investment Losses (Gains), Net		(23	)		371			(374	)
Other, Net		(94	)		(418	)		(165	)
NET CASH PROVIDED BY OPERATING   ACTIVITIES		2,435			2,544			3,191
Cash Flows from Investing Activities
Proceeds from Fixed Maturities
Sales		3,029			4,145			4,616
Maturities, Calls and Redemptions		2,578			2,173			1,790
Proceeds from Sales of Equity Securities		394			432			360
Purchases of Fixed Maturities		(7,390	)		(7,125	)		(7,909	)
Purchases of Equity Securities		(37	)		(191	)		(650	)
Investments in Other Invested Assets, Net		(37	)		(45	)		(164	)
Decrease (Increase) in Short Term Investments, Net		563			(654	)		455
Increase (Decrease) in Net Payable from Security Transactions not Settled		72			(18	)		(106	)
Purchases of Property and Equipment, Net		(52	)		(46	)		(53	)
Other, Net		6			3			12
NET CASH USED IN INVESTING ACTIVITIES		(874	)		(1,326	)		(1,649	)
Cash Flows from Financing Activities
Proceeds from Issuance of Long Term Debt		—			1,200			1,800
Repayment of Long Term Debt		—			(685	)		(800	)
Decrease in Funds Held under Deposit Contracts		(53	)		(19	)		(8	)
Proceeds from Issuance of Common Stock Under Stock-Based Employee Compensation Plans		34			109			130
Repurchase of Shares		(1,060	)		(1,336	)		(2,185	)
Dividends Paid to Shareholders		(487	)		(471	)		(451	)
Other, Net		—			(9	)		(17	)
NET CASH USED IN FINANCING ACTIVITIES		(1,566	)		(1,211	)		(1,531	)
Net Increase (Decrease) in Cash		(5	)		7			11
Cash at Beginning of Year		56			49			38
CASH AT END OF YEAR	$	51		$	56		$	49

       See accompanying notes.

F-6

     THE CHUBB CORPORATION

      Consolidated Statements of Comprehensive Income

	In Millions
	Years Ended December 31
	2009			2008			2007
Net Income	$	2,183		$	1,804		$	2,807
Other Comprehensive Income (Loss), Net of Tax
Change in Unrealized Appreciation or Depreciation of Investments		1,223			(669	)		134
Change in Unrealized Other-Than-Temporary Impairment Losses on Investments		(6	)		—			—
Foreign Currency Translation Gains (Losses)		170			(226	)		125
Change in Postretirement Benefit Costs Not Yet Recognized in Net Income		98			(284	)		(17	)
		1,485			(1,179	)		242
COMPREHENSIVE INCOME	$	3,668		$	625		$	3,049

       

See accompanying notes.

F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  Summary of Significant Accounting Policies

(a) Basis of Presentation

The Chubb Corporation (Chubb) is a holding company with subsidiaries principally engaged in the property and casualty insurance business. The property and casualty insurance subsidiaries (the P&C Group) underwrite most lines of property and casualty insurance in the United States, Canada, Europe, Australia and parts of Latin America and Asia. The geographic distribution of property and casualty business in the United States is broad with a particularly strong market presence in the Northeast.

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and include the accounts of Chubb and its subsidiaries (collectively, the Corporation). Significant intercompany transactions have been eliminated in consolidation.

The consolidated financial statements include amounts based on informed estimates and judgments of management for transactions that are not yet complete. Such estimates and judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Effective April 1, 2009, the Corporation adopted new guidance issued by the Financial Accounting Standards Board (FASB) related to the recognition and presentation of other-than-temporary impairments. This guidance may not be retroactively applied to prior periods’ financial statements; accordingly, consolidated financial statements for periods prior to April 1, 2009 have not been restated for this change in accounting policy. This accounting change is further described in Note (2)(b).

Certain amounts in the consolidated financial statements for prior years have been reclassified to conform with the 2009 presentation.

(b) Invested Assets

Short term investments, which have an original maturity of one year or less, are carried at amortized cost, which approximates fair value.

Fixed maturities, which include bonds and redeemable preferred stocks, are purchased to support the investment strategies of the Corporation. These strategies are developed based on many factors including rate of return, maturity, credit risk, tax considerations and regulatory requirements. Fixed maturities are classified as available-for-sale and carried at fair value as of the balance sheet date. Fixed maturities may be sold prior to maturity to support the investment strategies of the Corporation.

Premiums and discounts arising from the purchase of fixed maturities are amortized using the interest method over the estimated remaining term of the securities. For mortgage-backed securities, prepayment assumptions are reviewed periodically and revised as necessary.

Equity securities, which include common stocks and non-redeemable preferred stocks, are carried at fair value as of the balance sheet date.

Unrealized appreciation or depreciation, including unrealized other-than-temporary impairment losses (see Note (4)(b)), of fixed maturities and equity securities carried at fair value is excluded from net income and is included, net of applicable deferred income tax, in other comprehensive income.

Other invested assets primarily include private equity limited partnerships which are carried at the Corporation’s equity in the net assets of the partnerships based on valuations provided by the manager of each partnership. As a result of the timing of the receipt of valuation data from the investment managers, these investments are reported on a three month lag. Changes in the Corporation’s equity in the net assets of the partnerships are included in net income as realized investment gains or losses.

Realized gains and losses on the sale of investments are determined on the basis of the cost of the specific investments sold and are included in net income. When the fair value of any investment is lower than its cost, an assessment is made to determine whether the decline is temporary or other than temporary. Effective April 1, 2009, the Corporation adopted new guidance related to the recognition of other-than-temporary impairments of investments (see Notes (2)(b) and (4)(b)).

(c) Premium Revenues and Related Expenses

Insurance premiums are earned on a monthly pro rata basis over the terms of the policies and include estimates of audit premiums and premiums on retrospectively rated policies. Assumed reinsurance premiums are earned over the terms of the reinsurance contracts. Unearned premiums represent the portion of direct and assumed premiums written applicable to the unexpired terms of the insurance policies and reinsurance contracts in force.

Ceded reinsurance premiums are reflected in operating results over the terms of the reinsurance contracts. Prepaid reinsurance premiums represent the portion of premiums ceded to reinsurers applicable to the unexpired terms of the reinsurance contracts in force.

Reinsurance reinstatement premiums are recognized in the same period as the loss event that gave rise to the reinstatement premiums.

Acquisition costs that vary with and are primarily related to the production of business are deferred and amortized over the period in which the related premiums are earned. Such costs include commissions, premium taxes and certain other underwriting and policy issuance costs. Commissions received related to reinsurance premiums ceded

F-8

are considered in determining net acquisition costs eligible for deferral. Deferred policy acquisition costs are reviewed to determine whether they are recoverable from future income. If such costs are deemed to be unrecoverable, they are expensed. Anticipated investment income is considered in the determination of the recoverability of deferred policy acquisition costs.

(d) Unpaid Losses and Loss Expenses

Unpaid losses and loss expenses (also referred to as loss reserves) include the accumulation of individual case estimates for claims that have been reported and estimates of claims that have been incurred but not reported as well as estimates of the expenses associated with processing and settling all reported and unreported claims, less estimates of anticipated salvage and subrogation recoveries. Estimates are based upon past loss experience modified for current trends as well as prevailing economic, legal and social conditions. Loss reserves are not discounted to present value.

Loss reserves are regularly reviewed using a variety of actuarial techniques. Reserve estimates are updated as historical loss experience develops, additional claims are reported and/or settled and new information becomes available. Any changes in estimates are reflected in operating results in the period in which the estimates are changed.

Reinsurance recoverable on unpaid losses and loss expenses represents an estimate of the portion of gross loss reserves that will be recovered from reinsurers. Amounts recoverable from reinsurers are estimated using assumptions that are consistent with those used in estimating the gross losses associated with the reinsured policies. A provision for estimated uncollectible reinsurance is recorded based on periodic evaluations of balances due from reinsurers, the financial condition of the reinsurers, coverage disputes and other relevant factors.

(e) Financial Products

Derivatives are carried at fair value as of the balance sheet date. Changes in fair value are recognized in net income in the period of the change and are included in other revenues.

Assets and liabilities related to the derivatives are included in other assets and other liabilities.

(f) Goodwill

Goodwill represents the excess of the cost of an acquired entity over the fair value of net assets acquired. Goodwill is tested for impairment at least annually.

(g) Property and Equipment

Property and equipment used in operations, including certain costs incurred to develop or obtain computer software for internal use, are capitalized and carried at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets.

(h) Real Estate

Real estate properties are carried at cost less accumulated depreciation and any writedowns for impairment. Real estate properties are reviewed for impairment whenever events or circumstances indicate that the carrying value of such properties may not be recoverable. Measurement of such impairment is based on the fair value of the property.

(i) Income Taxes

Deferred income tax assets and liabilities are recognized for the expected future tax effects attributable to temporary differences between the financial reporting and tax bases of assets and liabilities, based on enacted tax rates and other provisions of tax law. The effect on deferred tax assets and liabilities of a change in tax laws or rates is recognized in net income in the period in which such change is enacted. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that all or some portion of the deferred tax assets will not be realized.

The Corporation does not consider the earnings of its foreign subsidiaries to be permanently reinvested. Accordingly, provision has been made for the expected U.S. federal income tax liabilities applicable to undistributed earnings of foreign subsidiaries.

(j) Stock-Based Employee Compensation

The fair value method of accounting is used for stock-based employee compensation plans. Under the fair value method, compensation cost is measured based on the fair value of the award at the grant date and recognized over the requisite service period.

(k) Foreign Exchange

Assets and liabilities relating to foreign operations are translated into U.S. dollars using current exchange rates as of the balance sheet date. Revenues and expenses are translated into U.S. dollars using the average exchange rates during the year.

The functional currency of foreign operations is generally the currency of the local operating environment since business is primarily transacted in such local currency. Translation gains and losses, net of applicable income tax, are excluded from net income and are credited or charged directly to other comprehensive income.

(l)  Cash Flow Information

In the statement of cash flows, short term investments are not considered to be cash equivalents. The effect of changes in foreign exchange rates on cash balances was immaterial.

In 2008, the Corporation received 2,000,000 shares of common stock of Harbor Point Limited upon conversion of $200 million of 6% convertible notes (see Note (3)). This noncash transaction has been excluded from the statement of cash flows.

F-9

(m)  Accounting Pronouncements Not Yet Adopted

In June 2009, the Financial Accounting Standards Board (FASB) issued new guidance on the accounting for a variable interest entity (VIE). A company would consolidate a VIE, as the primary beneficiary, when a company has both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. Ongoing reassessment of whether a company is the primary beneficiary of a VIE is required. The new guidance replaces the quantitative-based approach previously required for determining which company, if any, has a controlling financial interest in a VIE. This guidance is effective for the Corporation for the year beginning January 1, 2010. The adoption of this guidance is not expected to have a significant effect on the Corporation’s financial position or results of operations.

(2)  Adoption of New Accounting Pronouncements

(a) Effective April 1, 2009, the Corporation adopted new guidance issued by the FASB related to determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly. The FASB provided additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased. The FASB also included guidance on identifying circumstances that indicate a transaction is not orderly. The adoption of this guidance did not have a significant effect on the Corporation’s financial position or results of operations.

(b) Effective April 1, 2009, the Corporation adopted new guidance issued by the FASB related to the recognition and presentation of other-than-temporary impairments. The FASB modified the guidance on the recognition of other-than-temporary impairments of debt securities. Under this guidance, an entity is required to recognize an other-than-temporary impairment when the entity concludes it has the intent to sell or it is more likely than not the entity will be required to sell an impaired debt security before the security recovers to its amortized cost value or it is likely the entity will not recover the entire amortized cost value of an impaired debt security. This guidance also changes the presentation in the financial statements of other-than-temporary impairments and provides for enhanced disclosures of both debt and equity securities. Under this guidance, if an entity has the intent to sell or it is more likely than not the entity will be required to sell an impaired debt security before the security recovers to its amortized cost value, the security is written down to fair value and the entire amount of the writedown is included in net income as a realized investment loss. For all other impaired debt securities, the impairment loss is separated into the amount representing the credit loss and the amount representing the loss related to all other factors. The portion of the impairment loss that represents the credit loss is included in net income as a realized investment loss and the amount representing the loss that relates to all other factors is included in other comprehensive income. This guidance requires a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption with a corresponding adjustment to accumulated other comprehensive income. The cumulative effect adjustment from adopting this guidance resulted in a $30 million increase to retained earnings and a corresponding decrease to accumulated other comprehensive income. The adoption of this guidance did not have a significant effect on the Corporation’s financial position or results of operations.

(c) Effective January 1, 2009, the Corporation adopted new guidance issued by the FASB related to the accounting for financial guarantee insurance contracts, which clarifies the guidance for such contracts. The adoption of this guidance did not have a significant effect on the Corporation’s financial position or results of operations.

(d) Effective January 1, 2009, the Corporation adopted new guidance issued by the FASB related to determining whether instruments granted in share-based payment transactions are participating securities. This guidance addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting in computing earnings per share. The adoption of this guidance did not have a significant effect on the Corporation’s earnings per share.

(3)  Transfer of Ongoing Reinsurance Assumed Business

In 2005, the Corporation completed a transaction involving a new Bermuda-based reinsurance company, Harbor Point Limited.

As part of the transaction, the Corporation transferred its ongoing reinsurance assumed business and certain related assets, including renewal rights, to Harbor Point. In exchange, the Corporation received from Harbor Point $200 million of 6% convertible notes and warrants to purchase common stock of Harbor Point. In 2008, the notes were converted into 2,000,000 shares of common stock of Harbor Point. The shares and warrants represent in the aggregate on a fully diluted basis approximately 18% of Harbor Point as of December 31, 2009.

The transaction resulted in a pre-tax gain of $204 million, of which $171 million was recognized in 2005 and $33 million was recognized in 2008.

F-10

(4) Invested Assets and Related Income

(a) The amortized cost and fair value of fixed maturities and equity securities were as follows:

	December 31
	2009								2008
			Gross		Gross						Gross		Gross
	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
	Cost		Appreciation		Depreciation		Value		Cost		Appreciation		Depreciation		Value
	(in millions)
Fixed maturities
Tax exempt	$	18,720	$	933	$	66	$	19,587	$	18,299	$	451	$	405	$	18,345
Taxable
U.S. Government and government agency and authority obligations		756		12		10		758		587		43		4		626
Corporate bonds		6,287		327		24		6,590		4,672		72		182		4,562
Foreign government and government agency obligations		5,903		221		11		6,113		5,153		307		3		5,457
Residential mortgage-backed securities		1,850		69		20		1,899		2,422		50		24		2,448
Commercial mortgage-backed securities		1,674		6		49		1,631		1,758		2		443		1,317
		16,470		635		114		16,991		14,592		474		656		14,410
Total fixed maturities	$	35,190	$	1,568	$	180	$	36,578	$	32,891	$	925	$	1,061	$	32,755
Equity securities	$	1,215	$	261	$	43	$	1,433	$	1,563	$	131	$	215	$	1,479

At December 31, 2009, the gross unrealized depreciation of fixed maturities included $15 million of unrealized other-than-temporary impairment losses recognized in accumulated other comprehensive income.

The amortized cost and fair value of fixed maturities at December 31, 2009 by contractual maturity were as follows:

	Amortized
	Cost		Fair Value
	(in millions)
Due in one year or less	$	1,380	$	1,403
Due after one year through five years		10,711		11,201
Due after five years through ten years		12,248		12,900
Due after ten years		7,327		7,544
		31,666		33,048
Residential mortgage-backed securities		1,850		1,899
Commercial mortgage-backed securities		1,674		1,631
	$	35,190	$	36,578

Actual maturities could differ from contractual maturities because borrowers may have the right to call or prepay obligations.

(b) The components of unrealized appreciation or depreciation, including unrealized other-than-temporary impairment losses, of investments carried at fair value were as follows:

	December 31
	2009		2008
	(in millions)
Fixed maturities
Gross unrealized appreciation	$	1,568	$	925
Gross unrealized depreciation		180		1,061
		1,388		(136	)
Equity securities
Gross unrealized appreciation		261		131
Gross unrealized depreciation		43		215
		218		(84	)
		1,606		(220	)
Deferred income tax liability (asset)		562		(77	)
	$	1,044	$	(143	)

When the fair value of an investment is lower than its cost, an assessment is made to determine whether the decline is temporary or other than temporary. The assessment of other-than-temporary impairment of fixed maturities and equity securities is based on both quantitative criteria and qualitative information and also considers a number of other factors including, but not limited to, the length of time and the extent to which the fair value has been less than the cost, the financial condition and near term prospects of the issuer, whether the issuer is current on contractually obligated interest and principal payments, general market conditions and industry or sector specific factors.

F-11

For fixed maturities, prior to April 1, 2009, the Corporation considered many factors including its intent and ability to hold a security for a period of time sufficient to allow for the recovery of the security’s cost. When an impairment was deemed other than temporary, the security was written down to fair value and the entire writedown was included in net income as a realized investment loss. Effective April 1, 2009, the Corporation adopted new guidance which modified the guidance on the recognition of other-than-temporary impairments of debt securities. Under this guidance, the Corporation is required to recognize an other-than-temporary impairment loss when it concludes it has the intent to sell or it is more likely than not it will be required to sell an impaired fixed maturity before the security recovers to its amortized cost value or it is likely it will not recover the entire amortized cost value of an impaired debt security. Also under this guidance, if the Corporation has the intent to sell or it is more likely than not that the Corporation will be required to sell an impaired fixed maturity before the security recovers to its amortized cost value, the security is written down to fair value and the entire amount of the writedown is included in net income as a realized investment loss. For all other impaired fixed maturities, the impairment loss is separated into the amount representing the credit loss and the amount representing the loss related to all other factors. The amount of the impairment loss that represents the credit loss is included in net income as a realized investment loss and the amount of the impairment loss that relates to all other factors is included in other comprehensive income.

For equity securities, the Corporation considers its intent and ability to hold a security for a period of time sufficient to allow for the recovery of cost. If the decline in the fair value of an equity security is deemed to be other than temporary, the security is written down to fair value and the amount of the writedown is included in net income as a realized investment loss.

For fixed maturities, the split between the amount of other-than-temporary impairment losses that represents credit losses and the amount that relates to all other factors is principally based on assumptions regarding the amount and timing of projected cash flows. For fixed maturities other than mortgage-backed securities, cash flow estimates are based on assumptions regarding the probability of default and estimates regarding the timing and amount of recoveries associated with a default. For mortgage-backed securities, cash flow estimates are based on assumptions regarding future prepayment rates, default rates, loss severity and timing of recoveries. The Corporation has developed the estimates of projected cash flows using information based on historical market data, industry analyst reports and forecasts and other data relevant to the collectability of a security.

The following table summarizes, for all investment securities in an unrealized loss position at December 31, 2009, the aggregate fair value and gross unrealized depreciation, including unrealized other-than-temporary impairment losses, by investment category and length of time that individual securities have continuously been in an unrealized loss position.

	Less Than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Depreciation		Value		Depreciation		Value		Depreciation
					(in millions)
Fixed maturities
Tax exempt	$	542	$	8	$	1,048	$	58	$	1,590	$	66
Taxable
U.S. Government and government agency and authority obligations		195		6		44		4		239		10
Corporate bonds		657		19		88		5		745		24
Foreign government and government agency obligations		809		11		—		—		809		11
Residential mortgage-backed securities		9		4		89		16		98		20
Commercial mortgage-backed securities		—		—		1,273		49		1,273		49
		1,670		40		1,494		74		3,164		114
Total fixed maturities		2,212		48		2,542		132		4,754		180
Equity securities		82		6		393		37		475		43
	$	2,294	$	54	$	2,935	$	169	$	5,229	$	223

At December 31, 2009, approximately 625 individual fixed maturity and equity securities were in an unrealized loss position, of which approximately 590 were fixed maturities. The Corporation does not have the intent to sell and it is not more likely than not that the Corporation will be required to sell these fixed maturities before the securities recover to their amortized cost value. In addition, the Corporation believes that none of the declines in the fair values of these fixed maturities relate to credit losses. The Corporation has the intent and ability to hold the equity securities in an unrealized loss position for a period of time sufficient to allow for the recovery of cost. The Corporation believes that none of the declines in the fair value of these fixed maturities and equity securities were other than temporary at December 31, 2009.

F-12

The following table summarizes, for all investment securities in an unrealized loss position at December 31, 2008, the aggregate fair value and gross unrealized depreciation by investment category and length of time that individual securities have continuously been in an unrealized loss position.

	Less Than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Depreciation		Value		Depreciation		Value		Depreciation
	(in millions)
Fixed maturities
Tax exempt	$	3,796	$	181	$	1,525	$	224	$	5,321	$	405
Taxable
U.S. Government and government agency and authority obligations		28		1		46		3		74		4
Corporate bonds		1,517		114		718		68		2,235		182
Foreign government and government agency obligations		77		2		100		1		177		3
Residential mortgage-backed securities		85		10		151		14		236		24
Commercial mortgage-backed securities		491		150		807		293		1,298		443
		2,198		277		1,822		379		4,020		656
Total fixed maturities		5,994		458		3,347		603		9,341		1,061
Equity securities		629		161		126		54		755		215
	$	6,623	$	619	$	3,473	$	657	$	10,096	$	1,276

The change in unrealized appreciation or depreciation of investments carried at fair value, including the change in unrealized other-than-temporary impairment losses and the cumulative effect adjustment as a result of adopting new guidance issued by the FASB related to the recognition and presentation of other-than-temporary impairments effective April 1, 2009 (see Note (2)(b)), was as follows:

	Years Ended December 31
	2009		2008			2007
	(in millions)
Change in unrealized appreciation or depreciation of fixed maturities	$	1,524	$	(533	)	$	190
Change in unrealized appreciation or depreciation of equity securities		302		(497	)		17
		1,826		(1,030	)		207
Deferred income tax (credit)		639		(361	)		73
	$	1,187	$	(669	)	$	134

  (c) The sources of net investment income were as follows:

	Years Ended December 31
	2009		2008		2007
	(in millions)
Fixed maturities	$	1,548	$	1,559	$	1,516
Equity securities		35		49		46
Short term investments		21		72		119
Other		45		52		57
Gross investment income		1,649		1,732		1,738
Investment expenses		39		32		35
	$	1,610	$	1,700	$	1,703

F-13

(d) Realized investment gains and losses were as follows:

	Years Ended December 31
	2009			2008			2007
	(in millions)
Fixed maturities
Gross realized gains	$	110		$	109		$	57
Gross realized losses		(38	)		(43	)		(53	)
Other-than-temporary impairment losses		(23	)		(111	)		(30	)
		49			(45	)		(26	)
Equity securities
Gross realized gains		84			125			136
Gross realized losses		—			(93	)		(1	)
Other-than-temporary impairment losses		(89	)		(335	)		(79	)
		(5	)		(303	)		56
Other invested assets		(21	)		(56	)		344
Harbor Point		—			33			—
	$	23		$	(371	)	$	374

In 2005, the Corporation transferred its ongoing reinsurance business and certain related assets to Harbor Point. The transaction resulted in a pre-tax gain of $204 million of which $33 million was recognized in 2008 (see Note (3)).

(e) As of December 31, 2009, fixed maturities still held by the Corporation for which a portion of their other-than-temporary impairment losses were recognized in other comprehensive income had cumulative credit-related losses of $20 million recognized in net income.

(5) Deferred Policy Acquisition Costs

Policy acquisition costs deferred and the related amortization reflected in operating results were as follows:

	Years Ended December 31
	2009			2008			2007
	(in millions)
Balance, beginning of year	$	1,532		$	1,556		$	1,480
Costs deferred during year
Commissions and brokerage		1,663			1,736			1,713
Premium taxes and assessments		240			256			253
Salaries and operating costs		1,091			1,148			1,178
		2,994			3,140			3,144
Foreign currency translation effect		28			(41	)		24
Amortization during year		(3,021	)		(3,123	)		(3,092	)
Balance, end of year	$	1,533		$	1,532		$	1,556

(6) Property and Equipment

Property and equipment included in other assets were as follows:

	December 31
	2009		2008
	(in millions)
Cost	$	678	$	631
Accumulated depreciation		368		307
	$	310	$	324

Depreciation expense related to property and equipment was $69 million, $64 million and $69 million for 2009, 2008 and 2007, respectively.

(7) Unpaid Losses and Loss Expenses

(a) The process of establishing loss reserves is complex and imprecise as it must take into consideration many variables that are subject to the outcome of future events. As a result, informed subjective estimates and judgments as to the P&C Group’s ultimate exposure to losses are an integral component of the loss reserving process. The loss reserve estimation process relies on the basic assumption that past experience, adjusted for the effects of current developments and likely trends, is an appropriate basis for predicting future outcomes.

Most of the P&C Group’s loss reserves relate to long tail liability classes of business. For many liability claims, significant periods of time, ranging up to several years or more, may elapse between the occurrence of the loss, the reporting of the loss and the settlement of the claim. The longer the time span between the incidence of a loss and the settlement of the claim, the more the ultimate settlement amount can vary.

There are numerous factors that contribute to the inherent uncertainty in the process of establishing loss reserves. Among these factors are changes in the inflation rate for goods and services related to covered damages such as medical care and home repair costs; changes in the judicial interpretation of policy provisions relating to the determination of coverage; changes in the general attitude of juries in the determination of liability and damages; legislative actions; changes in the medical condition of claimants; changes in the estimates of the number and/or severity of claims that have been incurred but not reported as of the date of the financial statements; and changes in the P&C Group’s book of business, underwriting standards and/or claim handling procedures.

In addition, the uncertain effects of emerging or potential claims and coverage issues that arise as legal, judicial and social conditions change must be taken into consideration. These issues have had, and may continue to have, a negative effect on loss reserves by either extending coverage beyond the original underwriting intent or by increasing the number or size of claims. As a result of such issues, the uncertainties inherent in estimating ultimate claim costs on the basis of past experience have grown, further complicating the already complex loss reserving process.

Management believes that the aggregate loss reserves of the P&C Group at December 31, 2009 were adequate to cover claims for losses that had occurred as of that date, including both those known and those yet to be reported. In establishing such reserves, management considers facts currently known and the present state of the law and coverage litigation. However, given the significant uncertainties inherent in the loss reserving process, it is possible that management’s estimate of the ultimate liability for losses that had occurred as of December 31, 2009 may change, which could have a material effect on the Corporation’s results of operations and financial condition.

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(b) A reconciliation of the beginning and ending liability for unpaid losses and loss expenses, net of reinsurance recoverable, and a reconciliation of the net liability to the corresponding liability on a gross basis is as follows:

	2009			2008			2007
	(in millions)
Gross liability, beginning of year	$	22,367		$	22,623		$	22,293
Reinsurance recoverable, beginning of year		2,212			2,307			2,594
Net liability, beginning of year		20,155			20,316			19,699
Net incurred losses and loss expenses related to
Current year		7,030			7,771			6,996
Prior years		(762	)		(873	)		(697	)
		6,268			6,898			6,299
Net payments for losses and loss expenses related to
Current year		1,943			2,401			1,883
Prior years		4,063			4,108			4,066
		6,006			6,509			5,949
Foreign currency translation effect		369			(550	)		267
Net liability, end of year		20,786			20,155			20,316
Reinsurance recoverable, end of year		2,053			2,212			2,307
Gross liability, end of year	$	22,839		$	22,367		$	22,623

Changes in loss reserve estimates are unavoidable because such estimates are subject to the outcome of future events. Loss trends vary and time is required for changes in trends to be recognized and confirmed. During 2009, the P&C Group experienced overall favorable development of $762 million on net unpaid losses and loss expenses established as of the previous year end. This compares with favorable prior year development of $873 million in 2008 and $697 million in 2007. Such favorable development was reflected in operating results in these respective years.

The net favorable development of $762 million in 2009 was due to various factors. Favorable development of about $340 million was experienced in the professional liability classes other than fidelity, including about $110 million outside the United States. A significant amount of favorable development occurred in the directors and officers liability, fiduciary liability and employment practices liability classes. A modest amount of unfavorable development was experienced in the errors and omissions liability class, particularly outside the United States. A majority of the favorable development in the professional liability classes was in accident years 2004 through 2006. Reported loss activity related to these accident years was less than expected reflecting a favorable business climate, lower policy limits and better terms and conditions. Favorable development of about $160 million in the aggregate was experienced in the homeowners and commercial property classes, primarily related to the 2007 and 2008 accident years. The severity of late reported property claims that emerged during 2009 was lower than expected and development on prior year catastrophe events was favorable. Favorable development of about $150 million in the aggregate was experienced in the commercial and personal liability classes. Favorable development in more recent accident years, particularly 2004 through 2006, was partially offset by adverse development in accident years 1999 and prior, which included $90 million of incurred losses related to toxic waste claims. The frequency and severity of prior period excess and primary liability claims have been generally lower than expected and the effects of underwriting changes that affected these years appear to have been more positive than expected. Favorable development of about $55 million was experienced in the run-off of the reinsurance assumed business due primarily to better than expected reported loss activity from cedants. Favorable development of about $35 million was experienced in the surety business due to lower than expected loss emergence, mainly related to more recent accident years. Favorable development of about $30 million was experienced in the personal automobile business due primarily to lower than expected severity.

The net favorable development of $873 million in 2008 was due to various factors. Favorable development of about $390 million was experienced in the professional liability classes other than fidelity, including about $150 million outside the United States. Favorable development occurred in each of the primary professional liability classes, including directors and officers liability, errors and omissions liability, fiduciary liability and employment practices liability. A majority of this favorable development was in the 2004 and 2005 accident years. Reported loss activity related to these accident years was less than expected, reflecting a favorable business climate, lower policy limits and better terms and conditions. Favorable development of about $170 million in the aggregate was experienced in the homeowners and commercial property classes, primarily related to the 2006 and 2007 accident years. Favorable development of about $120 million was experienced in the commercial liability classes. Favorable development in these classes, particularly excess liability and multiple peril liability in accident years 2002 through 2006, more than offset adverse development in accident years prior to 1998, which was mostly due to the $85 million related to toxic waste claims. Favorable development of about $75 million was experienced in the fidelity class due to lower than expected reported loss emergence, particularly outside the United States, mainly related to recent accident years. Favorable development of about $60 million was experienced in the run-off of the reinsurance assumed business due primarily to better than expected reported loss activity from cedants. Favorable development of about $30 million was experienced in the workers’ compensation class due in part to further recognition of the positive effects of reforms in California. Favorable development of about $30 million was experienced in the personal automobile business due primarily to lower than expected severity.

The net favorable development of $697 million in 2007 was due to various factors. Favorable development of about $300 million was experienced in the professional liability classes other than fidelity, including about $100 million outside the United States. A majority of this favorable development was in the 2003 through 2005 accident years. Reported loss activity related to these accident years was less than expected, reflecting a favorable business climate, lower policy limits and better terms and conditions. Favorable development of about $180 million was experienced in the aggregate in the homeowners and commercial property classes, primarily related to the 2005 and 2006 accident years. This favorable development arose from the lower than expected

F-15

emergence of actual losses during 2007 relative to expectations used to establish the loss reserves at the end of 2006. Favorable development of about $135 million was experienced in the run-off of the reinsurance assumed business due primarily to better than expected reported loss activity from cedants. Favorable development of about $40 million and $30 million was experienced in the fidelity class and the surety class, respectively, due to lower than expected reported loss emergence, mainly related to more recent accident years. Favorable development of about $30 million was experienced in the personal automobile class. Case development during 2007 on previously reported claims was better than expected and the number of late reported claims was less than expected. Unfavorable development of about $20 million was experienced in the commercial liability classes. Unfavorable development in accident years prior to 1997, mostly the $88 million related to asbestos and toxic waste claims, was largely offset by favorable development in these classes in the more recent accident years.

(c) The estimation of loss reserves relating to asbestos and toxic waste claims on insurance policies written many years ago is subject to greater uncertainty than other types of claims due to inconsistent court decisions as well as judicial interpretations and legislative actions that in some cases have tended to broaden coverage beyond the original intent of such policies and in others have expanded theories of liability. The insurance industry as a whole is engaged in extensive litigation over these coverage and liability issues and is thus confronted with a continuing uncertainty in its efforts to quantify these exposures.

Asbestos remains the most significant and difficult mass tort for the insurance industry in terms of claims volume and dollar exposure. Asbestos claims relate primarily to bodily injuries asserted by those who came in contact with asbestos or products containing asbestos. Tort theory affecting asbestos litigation has evolved over the years. Early court cases established the “continuous trigger” theory with respect to insurance coverage. Under this theory, insurance coverage is deemed to be triggered from the time a claimant is first exposed to asbestos until the manifestation of any disease. This interpretation of a policy trigger can involve insurance policies over many years and increases insurance companies’ exposure to liability.

New asbestos claims and new exposures on existing claims have continued despite the fact that usage of asbestos has declined since the mid-1970’s. Many claimants were exposed to multiple asbestos products over an extended period of time. As a result, claim filings typically name dozens of defendants. The plaintiffs’ bar has solicited new claimants through extensive advertising and through asbestos medical screenings. A vast majority of asbestos bodily injury claims are filed by claimants who do not show any signs of asbestos related disease. New asbestos cases are often filed in those jurisdictions with a reputation for judges and juries that are extremely sympathetic to plaintiffs.

Approximately 80 manufacturers and distributors of asbestos products have filed for bankruptcy protection as a result of asbestos related liabilities. A bankruptcy sometimes involves an agreement to a plan between the debtor and its creditors, including current and future asbestos claimants. Although the debtor is negotiating in part with its insurers’ money, insurers are generally given only limited opportunity to be heard. In addition to contributing to the overall number of claims, bankruptcy proceedings have also caused increased settlement demands against remaining solvent defendants.

There have been some positive legislative and judicial developments in the asbestos environment over the past several years. Various challenges to the mass screening of claimants have been mounted which have led to higher medical evidentiary standards. Also, a number of states have implemented legislative and judicial reforms that focus the courts’ resources on the claims of the most seriously injured. Those who allege serious injury and can present credible evidence of their injuries are receiving priority trial settings in the courts, while those who have not shown any credible disease manifestation are having their hearing dates delayed or placed on an inactive docket, which preserves the right to pursue litigation in the future. Further, a number of key jurisdictions have adopted venue reform that requires plaintiffs to have a connection to the jurisdiction in order to file a complaint. Finally, in recognition that many aspects of bankruptcy plans are unfair to certain classes of claimants and to the insurance industry, these plans are beginning to be closely scrutinized by the courts and rejected when appropriate.

The P&C Group’s most significant individual asbestos exposures involve products liability on the part of “traditional” defendants who were engaged in the manufacture, distribution or installation of products containing asbestos. The P&C Group wrote excess liability and/or general liability coverages for these insureds. While these insureds are relatively few in number, their exposure has become substantial due to the increased volume of claims, the erosion of the underlying limits and the bankruptcies of target defendants.

The P&C Group’s other asbestos exposures involve products and non-products liability on the part of “peripheral” defendants, including a mix of manufacturers, distributors and installers of certain products that contain asbestos in small quantities and owners or operators of properties where asbestos was present. Generally, these insureds are named defendants on a regional rather than a nationwide basis. As the financial resources of traditional asbestos defendants have been depleted, plaintiffs are targeting these viable peripheral parties with greater frequency and, in many cases, for large awards.

Asbestos claims against the major manufacturers, distributors or installers of asbestos products were typically presented under the products liability section of primary general liability policies as well as under excess liability policies, both of which typically had aggregate limits that capped an insurer’s exposure. In recent years, a number of asbestos claims by insureds are being presented as “non-products” claims, such as those by installers of asbestos products and by property owners or operators who allegedly had asbestos on their property, under the premises or operations section of primary general liability policies.

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Unlike products exposures, these non-products exposures typically had no aggregate limits on coverage, creating potentially greater exposure. Further, in an effort to seek additional insurance coverage, some insureds with installation activities who have substantially eroded their products coverage are presenting new asbestos claims as non-products operations claims or attempting to reclassify previously settled products claims as non-products claims to restore a portion of previously exhausted products aggregate limits. It is difficult to predict whether insureds will be successful in asserting claims under non-products coverage or whether insurers will be successful in asserting additional defenses. Accordingly, the ultimate cost to insurers of the claims for coverage not subject to aggregate limits is uncertain.

Various U.S. federal proposals to solve the ongoing asbestos litigation crisis have been considered by the U.S. Congress over the past few years, but none have yet been enacted. The prospect of federal asbestos reform legislation remains uncertain.

In establishing asbestos reserves, the exposure presented by each insured is evaluated. As part of this evaluation, consideration is given to a variety of factors including the available insurance coverage; limits and deductibles; the jurisdictions involved; past settlement values of similar claims; the potential role of other insurance, particularly underlying coverage below excess liability policies; potential bankruptcy impact; relevant judicial interpretations; and applicable coverage defenses, including asbestos exclusions.

Significant uncertainty remains as to the ultimate liability of the P&C Group related to asbestos related claims. This uncertainty is due to several factors including the long latency period between asbestos exposure and disease manifestation and the resulting potential for involvement of multiple policy periods for individual claims; plaintiffs’ expanding theories of liability and increased focus on peripheral defendants; the volume of claims by unimpaired plaintiffs and the extent to which they can be precluded from making claims; the efforts by insureds to claim the right to non-products coverage not subject to aggregate limits; the number of insureds seeking bankruptcy protection as a result of asbestos related liabilities; the ability of claimants to bring a claim in a state in which they have no residency or exposure; the impact of the exhaustion of primary limits and the resulting increase in claims on excess liability policies that the P&C Group has issued; inconsistent court decisions and diverging legal interpretations; and the possibility, however remote, of federal legislation that would address the asbestos problem. These significant uncertainties are not likely to be resolved in the near future.

Toxic waste claims relate primarily to pollution and related cleanup costs. The P&C Group’s insureds have two potential areas of exposure: hazardous waste dump sites and pollution at the insured site primarily from underground storage tanks and manufacturing processes.

The U.S. federal Comprehensive Environmental Response Compensation and Liability Act of 1980 (Superfund) has been interpreted to impose strict, retroactive and joint and several liability on potentially responsible parties (PRPs) for the cost of remediating hazardous waste sites. Most sites have multiple PRPs.

Most PRPs named to date are parties who have been generators, transporters, past or present landowners or past or present site operators. Insurance policies issued to PRPs were not intended to cover claims arising from gradual pollution. Environmental remediation claims tendered by PRPs and others to insurers have frequently resulted in disputes over insurers’ contractual obligation with respect to pollution claims. The resulting litigation against insurers extends to issues of liability, coverage and other policy provisions.

There is substantial uncertainty involved in estimating the P&C Group’s liabilities related to these claims. First, the liabilities of the claimants are extremely difficult to estimate. At any given waste site, the allocation of remediation costs among governmental authorities and the PRPs varies greatly depending on a variety of factors. Second, different courts have addressed liability and coverage issues regarding pollution claims and have reached inconsistent conclusions in their interpretation of several issues. These significant uncertainties are not likely to be resolved definitively in the near future.

Uncertainties also remain as to the Superfund law itself. Superfund’s taxing authority expired on December 31, 1995 and has not been re-enacted. Federal legislation appears to be at a standstill. At this time, it is not possible to predict the direction that any reforms may take, when they may occur or the effect that any changes may have on the insurance industry.

Without federal movement on Superfund reform, the enforcement of Superfund liability has occasionally shifted to the states. States are being forced to reconsider state-level cleanup statutes and regulations. As individual states move forward, the potential for conflicting state regulation becomes greater. In a few states, cases have been brought against insureds or directly against insurance companies for environmental pollution and natural resources damages. To date, only a few natural resources claims have been filed and they are being vigorously defended. Significant uncertainty remains as to the cost of remediating the state sites. Because of the large number of state sites, such sites could prove even more costly in the aggregate than Superfund sites.

In establishing toxic waste reserves, the exposure presented by each insured is evaluated. As part of this evaluation, consideration is given to the probable liability, available insurance coverage, past settlement values of similar claims, relevant judicial interpretations, applicable coverage defenses as well as facts that are unique to each insured.

Management believes that the loss reserves carried at December 31, 2009 for asbestos and toxic waste claims were adequate. However, given the judicial decisions and legislative actions that have broadened the scope of coverage and expanded theories of liability in the past and the possibilities of similar interpretations in the future, it is possible that the estimate of loss reserves relating to these exposures may increase in future periods as new information becomes available and as claims develop.

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(8) Debt and Credit Arrangements

(a) Long term debt consisted of the following:

	December 31
	2009		2008
	(in millions)
6% notes due November 15, 2011	$	400	$	400
5.2% notes due April 1, 2013		275		275
5.75% notes due May 15, 2018		600		600
6.6% debentures due August 15, 2018		100		100
6.8% debentures due November 15, 2031		200		200
6% notes due May 11, 2037		800		800
6.5% notes due May 15, 2038		600		600
6.375% capital securities due March 29, 2067		1,000		1,000
	$	3,975	$	3,975

Chubb has outstanding $1.0 billion of unsecured junior subordinated capital securities. The capital securities will become due on April 15, 2037, the scheduled maturity date, but only to the extent that Chubb has received sufficient net proceeds from the sale of certain qualifying capital securities. Chubb must use its commercially reasonable efforts, subject to certain market disruption events, to sell enough qualifying capital securities to permit repayment of the capital securities on the scheduled maturity date or as soon thereafter as possible. Any remaining outstanding principal amount will be due on March 29, 2067, the final maturity date. The capital securities bear interest at a fixed rate of 6.375% through April 14, 2017. Thereafter, the capital securities will bear interest at a rate equal to the three-month LIBOR rate plus 2.25%. Subject to certain conditions, Chubb has the right to defer the payment of interest on the capital securities for a period not exceeding ten consecutive years. During any such period, interest will continue to accrue and Chubb generally may not declare or pay any dividends on or purchase any shares of its capital stock.

In connection with the issuance of the capital securities, Chubb entered into a replacement capital covenant in which it agreed that it will not repay, redeem, or purchase the capital securities before March 29, 2047, unless, subject to certain limitations, it has received proceeds from the sale of replacement capital securities, as defined. The replacement capital covenant is not intended for the benefit of holders of the capital securities and may not be enforced by them. The replacement capital covenant is for the benefit of holders of one or more designated series of Chubb’s indebtedness, which will initially be its 6.8% debentures due November 15, 2031.

Subject to the replacement capital covenant, the capital securities may be redeemed, in whole or in part, at any time on or after April 15, 2017 at a redemption price equal to the principal amount plus any accrued interest or prior to April 15, 2017 at a redemption price equal to the greater of (i) the principal amount or (ii) a make-whole amount, in each case plus any accrued interest.

The 6% notes due in 2011, the 5.2% notes, the 5.75% notes, the 6.6% debentures, the 6.8% debentures, the 6% notes due in 2037 and the 6.5% notes are all unsecured obligations of Chubb. Chubb generally may redeem some or all of the notes and debentures prior to maturity in accordance with the terms of each debt instrument.

The amounts of long term debt due annually during the five years subsequent to December 31, 2009 are as follows:

Years Ending
December 31
	(in millions)
2010	$	—
2011		400
2012		—
2013		275
2014		—

(b) Interest costs of $248 million, $240 million and $206 million were incurred in 2009, 2008 and 2007, respectively. Interest paid was $244 million, $232 million and $191 million in 2009, 2008 and 2007, respectively.

(c) Chubb has a revolving credit agreement with a group of banks that provides for up to $500 million of unsecured borrowings. There have been no borrowings under this agreement. Various interest rate options are available to Chubb, all of which are based on market interest rates. Chubb pays a fee to have this revolving credit facility available. The agreement contains customary restrictive covenants including a covenant to maintain a minimum consolidated shareholders’ equity, as adjusted. At December 31, 2009, Chubb was in compliance with all such covenants. The revolving credit facility is available for general corporate purposes and to support Chubb’s commercial paper borrowing arrangement. The agreement has a termination date of October 19, 2012. Under the agreement, Chubb is permitted to request on two occasions, at any time during the remaining term of the agreement, an extension of the maturity date for an additional one year period. On the termination date of the agreement, any borrowings then outstanding become payable.

F-18

(9) Federal and Foreign Income Tax

(a) Income tax expense and taxes paid consisted of the following components:

	Years Ended December 31
	2009		2008			2007
	(in millions)
Income tax expense
Current tax
United States	$	532	$	457		$	952
Foreign		161		202			168
Deferred tax (credit), principally United States		86		(56	)		10
	$	779	$	603		$	1,130
Federal and foreign income taxes paid	$	720	$	739		$	1,140

(b) The effective income tax rate is different than the statutory federal corporate tax rate. The reasons for the different effective tax rate were as follows:

	Years Ended December 31
	2009						2008						2007
				% of						% of						% of
				Pre-Tax						Pre-Tax						Pre-Tax
	Amount			Income			Amount			Income			Amount			Income
	(in millions)
Income before federal and foreign income tax	$	2,962					$	2,407					$	3,937
Tax at statutory federal income tax rate	$	1,037			35.0	%	$	842			35.0	%	$	1,378			35.0	%
Tax exempt interest income		(239	)		(8.1	)		(235	)		(9.7	)		(232	)		(5.9	)
Other, net		(19	)		(.6	)		(4	)		(.2	)		(16	)		(.4	)
Actual tax	$	779			26.3	%	$	603			25.1	%	$	1,130			28.7	%

(c) The tax effects of temporary differences that gave rise to deferred income tax assets and liabilities were as follows:

	December 31
	2009		2008
	(in millions)
Deferred income tax assets
Unpaid losses and loss expenses	$	650	$	680
Unearned premiums		335		351
Foreign tax credits		879		788
Employee compensation		131		134
Postretirement benefits		171		285
Other-than-temporary impairment losses		287		244
Unrealized depreciation of investments		—		77
Total		2,453		2,559
Deferred income tax liabilities
Deferred policy acquisition costs		439		451
Unremitted earnings of foreign subsidiaries		932		810
Unrealized appreciation of investments		562		—
Other invested assets		128		95
Other, net		120		59
Total		2,181		1,415
Net deferred income tax asset	$	272	$	1,144

Although realization of deferred income tax assets is not assured, management believes that it is more likely than not that the deferred tax assets will be realized. Accordingly, no valuation allowance was recorded at December 31, 2009 or 2008.

(d) Chubb and its domestic subsidiaries file a consolidated federal income tax return with the U.S. Internal Revenue Service (IRS). The Corporation also files income tax returns with various state and foreign tax authorities. The U.S. income tax returns for years prior to 2004 are no longer subject to examination by the IRS. The examination of the U.S. income tax returns for 2004, 2005 and 2006 is expected to be completed in 2011. Management does not anticipate any assessments for tax years that remain subject to examination that would have a material effect on the Corporation’s financial position or results of operations.

F-19

(10) Reinsurance

In the ordinary course of business, the P&C Group assumes and cedes reinsurance with other insurance companies. Reinsurance is ceded to provide greater diversification of risk and to limit the P&C Group’s maximum net loss arising from large risks or catastrophic events.

A large portion of the P&C Group’s ceded reinsurance is effected under contracts known as treaties under which all risks meeting prescribed criteria are automatically covered. Most of these arrangements consist of excess of loss and catastrophe contracts that protect against a specified part or all of certain types of losses over stipulated amounts arising from any one occurrence or event. In certain circumstances, reinsurance is also effected by negotiation on individual risks.

Ceded reinsurance contracts do not relieve the P&C Group of the primary obligation to its policyholders. Thus, an exposure exists with respect to reinsurance ceded to the extent that any reinsurer is unable or unwilling to meet its obligations assumed under the reinsurance contracts. The P&C Group monitors the financial strength of its reinsurers on an ongoing basis.

Premiums earned and insurance losses and loss expenses are reported net of reinsurance in the consolidated statements of income.

The effect of reinsurance on the premiums written and earned of the P&C Group was as follows:

	Years Ended December 31
	2009			2008			2007
	(in millions)
Direct premiums written	$	11,813		$	12,443		$	12,432
Reinsurance assumed		370			549			775
Reinsurance ceded		(1,106	)		(1,210	)		(1,335	)
Net premiums written	$	11,077		$	11,782		$	11,872
Direct premiums earned	$	12,058		$	12,441		$	12,457
Reinsurance assumed		435			607			789
Reinsurance ceded		(1,162	)		(1,220	)		(1,300	)
Net premiums earned	$	11,331		$	11,828		$	11,946

The ceded reinsurance premiums written and earned included $40 million and $111 million, respectively, in 2009 and $195 million and $243 million, respectively, in 2008 and $386 million and $344 million, respectively, in 2007 that were ceded to Harbor Point.

Ceded losses and loss expenses, which reduce losses and loss expenses incurred, were $291 million, $417 million and $460 million in 2009, 2008 and 2007, respectively. The ceded losses and loss expenses in 2009, 2008 and 2007 included $64 million, $163 million and $183 million, respectively, that were ceded to Harbor Point.

(11) Segments Information

The principal business of the Corporation is the sale of property and casualty insurance. The profitability of the property and casualty insurance business depends on the results of both underwriting operations and investments, which are viewed as two distinct operations. The underwriting operations are managed and evaluated separately from the investment function.

The P&C Group underwrites most lines of property and casualty insurance. Underwriting operations consist of four separate business units: personal insurance, commercial insurance, specialty insurance and reinsurance assumed. The personal segment targets the personal insurance market. The personal classes include automobile, homeowners and other personal coverages. The commercial segment includes those classes of business that are generally available in broad markets and are of a more commodity nature. Commercial classes include multiple peril, casualty, workers’ compensation and property and marine. The specialty segment includes those classes of business that are available in more limited markets since they require specialized underwriting and claim settlement. Specialty classes include professional liability coverages and surety. The reinsurance assumed business is effectively in run-off following the sale, in 2005, of the ongoing business to Harbor Point (see Note (3)).

Corporate and other includes investment income earned on corporate invested assets, corporate expenses and the results of the Corporation’s non-insurance subsidiaries.

Performance of the property and casualty underwriting segments is measured based on statutory underwriting results. Statutory underwriting profit is arrived at by reducing premiums earned by losses and loss expenses incurred and statutory underwriting expenses incurred. Under statutory accounting principles applicable to property and casualty insurance companies, policy acquisition and other underwriting expenses are recognized immediately, not at the time premiums are earned.

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

Investment income performance is measured based on investment income net of investment expenses, excluding realized investment gains and losses.

F-20

Distinct investment portfolios are not maintained for each underwriting segment. Property and casualty invested assets are available for payment of losses and expenses for all classes of business. Therefore, such assets and the related investment income are not allocated to underwriting segments.

Revenues, income before income tax and assets of each operating segment were as follows:

	Years Ended December 31
	2009			2008			2007
	(in millions)
Revenues
Property and casualty insurance
Premiums earned
Personal insurance	$	3,692		$	3,787		$	3,642
Commercial insurance		4,762			5,015			5,120
Specialty insurance		2,829			2,935			2,971
Total insurance		11,283			11,737			11,733
Reinsurance assumed		48			91			213
		11,331			11,828			11,946
Investment income		1,585			1,652			1,622
Other revenues		2			4			11
Total property and casualty insurance		12,918			13,484			13,579
Corporate and other		75			108			154
Realized investment gains (losses)		23			(371	)		374
Total revenues	$	13,016		$	13,221		$	14,107
Income (loss) before income tax
Property and casualty insurance
Underwriting
Personal insurance	$	600		$	478		$	532
Commercial insurance		510			309			738
Specialty insurance		474			499			678
Total insurance		1,584			1,286			1,948
Reinsurance assumed		74			58			116
		1,658			1,344			2,064
Increase (decrease) in deferred policy acquisition costs		(27	)		17			52
Underwriting income		1,631			1,361			2,116
Investment income		1,549			1,622			1,590
Other income (charges)		(3	)		9			6
Total property and casualty insurance		3,177			2,992			3,712
Corporate and other loss		(238	)		(214	)		(149	)
Realized investment gains (losses)		23			(371	)		374
Total income before income tax	$	2,962		$	2,407		$	3,937

	December 31
	2009			2008			2007
	(in millions)
Assets
Property and casualty insurance	$	47,682		$	45,354		$	47,931
Corporate and other		2,876			3,297			2,785
Adjustments and eliminations		(109	)		(222	)		(142	)
Total assets	$	50,449		$	48,429		$	50,574

The international business of the property and casualty insurance segment is conducted primarily through subsidiaries that operate solely outside of the United States. Their assets and liabilities are located principally in the countries where the insurance risks are written. International business is also written by branch offices of certain domestic subsidiaries.

Revenues of the P&C Group by geographic area were as follows:

	Years Ended December 31
	2009		2008		2007
	(in millions)
Revenues
United States	$	9,991	$	10,329	$	10,624
International		2,927		3,155		2,955
Total	$	12,918	$	13,484	$	13,579

F-21

(12) Stock-Based Employee Compensation Plans

The Corporation has two stock-based employee compensation plans, the Long-Term Incentive Plan and the Stock Purchase Plan. The compensation cost with respect to these plans was $80 million, $81 million and $87 million in 2009, 2008 and 2007, respectively. The total income tax benefit included in net income with respect to these stock-based compensation arrangements was $28 million in 2009 and 2008 and $31 million in 2007.

As of December 31, 2009, there was $84 million of unrecognized compensation cost related to nonvested awards. That cost is expected to be reflected in operating results over a weighted average period of 1.7 years.

(a) The Long-Term Incentive Plan provides for the granting of restricted stock units, restricted stock, performance units, stock options and other stock-based awards to key employees. The maximum number of shares of Chubb’s common stock in respect to which stock-based awards may be granted under the plan most recently approved by shareholders is 8,650,000 shares. Additional shares of Chubb’s common stock may also become available for grant in connection with the cancellation, forfeiture and/or settlement of awards previously granted. At December 31, 2009, 9,394,896 shares were available for grant.

Restricted Stock Units, Restricted Stock and Performance Units

Restricted stock unit awards are payable in cash, in shares of Chubb’s common stock or in a combination of both. Restricted stock units are not considered to be outstanding shares of common stock, have no voting rights and are subject to forfeiture during the restriction period. Holders of restricted stock units may receive dividend equivalents. Restricted stock awards consist of shares of Chubb’s common stock granted at no cost to the employees. Shares of restricted stock become outstanding when granted, receive dividends and have voting rights. The shares are subject to forfeiture and to restrictions that prevent their sale or transfer during the restriction period. Performance unit awards are based on the achievement of performance goals over three year performance periods. Performance unit awards are payable in cash, in shares of Chubb’s common stock or in a combination of both.

An amount equal to the fair value at the date of grant of restricted stock unit awards, restricted stock awards and performance unit awards is expensed over the vesting period. The weighted average fair value per share of the restricted stock units granted was $40.38, $50.44 and $50.10 in 2009, 2008 and 2007, respectively. The weighted average fair value per share of the performance units granted was $45.60, $51.46 and $52.99 in 2009, 2008 and 2007, respectively.

Additional information with respect to restricted stock units and performance units is as follows:

	Restricted Stock Units					Performance Units*
				Weighted Average					Weighted Average
	Number			Grant Date		Number			Grant Date
	of Shares			Fair Value		of Shares			Fair Value
Nonvested, January 1, 2009		3,052,561		$	49.46		1,230,932		$	52.24
Granted		1,273,560			40.38		803,524			45.60
Vested		(1,012,316	)		47.56		(627,499	)**		52.99
Forfeited		(137,954	)		47.26		(27,836	)		46.79
Nonvested, December 31, 2009		3,175,851			46.52		1,379,121			48.14

*	The number of shares earned may range from 0% to 200% of the performance units shown in the table above.
**	The performance units earned in 2009 were 132.2% of the vested shares shown in the table, or 829,554 shares.

The total fair value of restricted stock units and restricted stock that vested during 2009, 2008 and 2007 was $41 million, $65 million and $77 million, respectively. The total fair value of performance units that vested during 2009, 2008 and 2007 was $41 million, $57 million and $58 million, respectively.

F-22

Stock Options

Stock options are granted at exercise prices not less than the fair value of Chubb’s common stock on the date of grant. The terms and conditions upon which options become exercisable may vary among grants. Options expire no later than ten years from the date of grant.

An amount equal to the fair value of stock options at the date of grant is expensed over the period that such options become exercisable. The weighted average fair value per stock option granted during 2009, 2008 and 2007 was $6.34, $6.04 and $8.39, respectively. The fair value of each stock option was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	2009			2008			2007
Risk-free interest rate		2	.0%		2	.5%		4	.4%
Expected volatility		23	.8%		16	.4%		16	.9%
Dividend yield		3	.4%		2	.5%		2	.2%
Expected average term (in years)		5	.4		3	.9		4	.3

Additional information with respect to stock options is as follows:

						Weighted Average
	Number			Weighted Average		Remaining		Aggregate
	of Shares			Exercise Price		Contractual Term		Intrinsic Value
						(in years)		(in millions)
Outstanding, January 1, 2009		5,814,200		$	35.02
Granted		131,800			40.64
Exercised		(865,563	)		30.27
Forfeited		(164,976	)		39.42
Outstanding, December 31, 2009		4,915,461			35.86		2.5		68
Exercisable, December 31, 2009		4,679,664			35.40		2.2		67

The total intrinsic value of the stock options exercised during 2009, 2008 and 2007 was $12 million, $52 million and $66 million, respectively. The Corporation received cash of $26 million, $74 million and $115 million during 2009, 2008 and 2007, respectively, from the exercise of stock options. The tax benefit realized with respect to the exercise of stock options was $4 million in 2009 and $19 million in 2008 and 2007.

(b) Under the Stock Purchase Plan, substantially all employees are eligible to receive rights to purchase shares of Chubb’s common stock at a fixed price at the end of the offering period. The price is determined on the date the purchase rights are granted and the offering period cannot exceed 27 months. The number of shares an eligible employee may purchase is based on the employee’s compensation. An amount equal to the fair value of purchase rights at the date of grant is expensed over the offering period. No purchase rights have been granted since 2002.

F-23

(13)  Employee Benefits

(a) The Corporation has several non-contributory defined benefit pension plans covering substantially all employees. Prior to 2001, benefits were generally based on an employee’s years of service and average compensation during the last five years of employment. Effective January 1, 2001, the Corporation changed the formula for providing pension benefits from the final average pay formula to a cash balance formula. Under the cash balance formula, a notional account is established for each employee, which is credited semi-annually with an amount equal to a percentage of eligible compensation based on age and years of service plus interest based on the account balance. Employees hired prior to 2001 will generally be eligible to receive vested benefits based on the higher of the final average pay or cash balance formulas.

The Corporation’s funding policy is to contribute amounts that meet regulatory requirements plus additional amounts determined by management based on actuarial valuations, market conditions and other factors. This may result in no contribution being made in a particular year.

The Corporation also provides certain other postretirement benefits, principally health care and life insurance, to retired employees and their beneficiaries and covered dependents. Substantially all employees hired before January 1, 1999 may become eligible for these benefits upon retirement if they meet minimum age and years of service requirements. Health care coverage is contributory. Retiree contributions vary based upon a retiree’s age, type of coverage and years of service with the Corporation. Life insurance coverage is non-contributory.

The Corporation funds a portion of the health care benefits obligation where such funding can be accomplished on a tax effective basis. Benefits are paid as covered expenses are incurred.

The funded status of the pension and other postretirement benefit plans at December 31, 2009 and 2008 was as follows:

					Other
	Pension Benefits				Postretirement Benefits
	2009		2008		2009		2008
	(in millions)
Benefit obligation	$	1,900	$	1,761	$	338	$	315
Plan assets at fair value		1,558		1,125		50		32
Funded status at end of year, included in other liabilities	$	342	$	636	$	288	$	283

Net loss and prior service cost included in accumulated other comprehensive income that were not yet recognized as components of net benefit costs at December 31, 2009 and 2008 were as follows:

					Other
					Postretirement
	Pension Benefits				Benefits
	2009		2008		2009			2008
	(in millions)
Net loss	$	681	$	808	$	54		$	59
Prior service cost (benefit)		28		30		(2	)		(2	)
	$	709	$	838	$	52		$	57

The accumulated benefit obligation for the pension plans was $1,593 million and $1,451 million at December 31, 2009 and 2008, respectively. The accumulated benefit obligation is the present value of pension benefits earned as of the measurement date based on employee service and compensation prior to that date. It differs from the pension benefit obligation in the table above in that the accumulated benefit obligation includes no assumptions regarding future compensation levels.

The weighted average assumptions used to determine the benefit obligations were as follows:

									Other
									Postretirement
	Pension Benefits								Benefits
	2009				2008				2009			2008
Discount rate		6	.0	%		6	.0	%		6.0	%		6.0	%
Rate of compensation increase		4	.5			4	.5			—			—

F-24

The Corporation made pension plan contributions of $228 million and $127 million during 2009 and 2008, respectively. The Corporation made other postretirement benefit plan contributions of $10 million during 2009 and 2008.

The components of net pension and other postretirement benefit costs reflected in net income and other changes in plan assets and benefit obligations recognized in other comprehensive income for the years ended December 31, 2009, 2008 and 2007 were as follows:

										Other
										Postretirement
	Pension Benefits									Benefits
	2009			2008			2007			2009			2008			2007
	(in millions)
Costs reflected in net income
Service cost	$	73		$	76		$	79		$	10		$	10		$	10
Interest cost		104			99			89			19			17			16
Expected return on plan assets		(118	)		(114	)		(100	)		(4	)		(3	)		(2	)
Amortization of net loss and prior service cost and other		46			51			32			1			1			1
	$	105		$	112		$	100		$	26		$	25		$	25
Changes in plan assets and benefit obligations recognized in other
comprehensive income
Net loss (gain)	$	(83	)	$	462		$	54		$	(4	)	$	27		$	4
Prior service cost		—			—			1			—			—			—
Amortization of net loss and prior service cost and other		(46	)		(51	)		(32	)		(1	)		(1	)		(1	)
	$	(129	)	$	411		$	23		$	(5	)	$	26		$	3

The estimated aggregate net loss and prior service cost that will be amortized from accumulated other comprehensive income into net benefit costs during 2010 for the pension and other postretirement benefit plans is $56 million.

The weighted average assumptions used to determine net pension and other postretirement benefit costs were as follows:

													Other
	Pension Benefits												Postretirement Benefits
	2009				2008				2007				2009				2008				2007
Discount rate		6	.0	%		6	.0	%		5	.75	%		6	.0	%		6	.0	%		5	.75	%
Rate of compensation increase		4	.5			4	.5			4	.5			—				—				—
Expected long term rate of return on plan assets		8	.0			8	.0			8	.0			8	.0			8	.0			8	.0

The weighted average health care cost trend rate assumptions used to measure the expected cost of medical benefits were as follows:

	December 31
	2009			2008
Health care cost trend rate for next year		8.7	%		8.75	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		4.5			5.0
Year that the rate reaches the ultimate trend rate		2028			2015

The health care cost trend rate assumption has a significant effect on the amount of the accumulated other postretirement benefit obligation and the net other postretirement benefit cost reported. To illustrate, a one percent increase or decrease in the trend rate for each year would increase or decrease the accumulated other postretirement benefit obligation at December 31, 2009 by approximately $57 million and the aggregate of the service and interest cost components of net other postretirement benefit cost for the year ended December 31, 2009 by approximately $5 million.

F-25

The long term objective of the pension plan is to provide sufficient funding to cover expected benefit obligations, while assuming a prudent level of portfolio risk. The assets of the pension plan are invested, either directly or through pooled funds, in a diversified portfolio of predominately U.S. equity securities and fixed maturities. The Corporation seeks to obtain a rate of return that over time equals or exceeds the returns of the broad markets in which the plan assets are invested. The target allocation of plan assets is 55% to 65% invested in equity securities, with the remainder primarily invested in fixed maturities. The Corporation rebalances its pension assets to the target allocation as market conditions permit. The Corporation determined the expected long term rate of return assumption for each asset class based on an analysis of the historical returns and the expectations for future returns. The expected long term rate of return for the portfolio is a weighted aggregation of the expected returns for each asset class.

The fair value of the pension plan assets at December 31, 2009, was as follows:

	(in millions)
Short term investments	$	33
Fixed maturities
U.S. Government and government agency and authority obligations		175
Corporate bonds		232
Foreign bonds		33
Mortgage-backed securities		121
Equity securities		935
Other assets		29
	$	1,558

At December 31, 2009, $794 million of pension plan assets were invested in pooled funds.

At December 31, 2009, the other postretirement benefit plan assets were invested in a pooled fund and had a fair value of $50 million.

The estimated benefits expected to be paid in each of the next five years and in the aggregate for the following five years are as follows:

			Other
Years Ending			Postretirement
December 31	Pension Benefits		Benefits
	(in millions)
2010	$	78	$	11
2011		72		12
2012		79		14
2013		85		15
2014		92		17
2015-2019		626		115

(b) The Corporation has a defined contribution benefit plan, the Capital Accumulation Plan, in which substantially all employees are eligible to participate. Under this plan, the employer makes an annual matching contribution equal to 100% of each eligible employee’s pre-tax elective contributions, up to 4% of the employee’s eligible compensation. Contributions are invested at the election of the employee in Chubb’s common stock or in various other investment funds. Employer contributions were $27 million in 2009, $28 million in 2008 and $27 million in 2007.

F-26

(14) Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average shares outstanding during the year. The computation of diluted earnings per share reflects the potential dilutive effect, using the treasury stock method, of outstanding awards under stock-based employee compensation plans.

The following table sets forth the computation of basic and diluted earnings per share:

	Years Ended December 31
	2009		2008		2007
	(in millions except for per share amounts)
Basic earnings per share:
Net income	$	2,183	$	1,804	$	2,807
Weighted average shares outstanding		350.1		361.1		393.6
Basic earnings per share	$	6.24	$	5.00	$	7.13
Diluted earnings per share:
Net income	$	2,183	$	1,804	$	2,807
Weighted average shares outstanding		350.1		361.1		393.6
Additional shares from assumed exercise of stock-based compensation awards		2.9		5.7		6.7
Weighted average shares and potential shares assumed outstanding for computing diluted earnings per share		353.0		366.8		400.3
Diluted earnings per share	$	6.18	$	4.92	$	7.01

(15) Comprehensive Income

Comprehensive income is defined as all changes in shareholders’ equity, except those arising from transactions with shareholders. Comprehensive income includes net income and other comprehensive income, which for the Corporation consists of changes in unrealized appreciation or depreciation of investments carried at fair value, changes in foreign currency translation gains or losses, changes in postretirement benefit costs not yet recognized in net income and, beginning in 2009, changes in unrealized other-than-temporary impairment losses on investments.

The components of other comprehensive income or loss were as follows:

	Years Ended December 31
	2009									2008									2007
	Before			Income						Before			Income						Before			Income
	Tax			Tax			Net			Tax			Tax			Net			Tax			Tax			Net
	(in millions)
Unrealized holding gains (losses) arising during the year	$	1,930		$	675		$	1,255		$	(1,378	)	$	(483	)	$	(895	)	$	237		$	83		$	154
Unrealized other-than-temporary impairment losses arising during the year		(14	)		(5	)		(9	)		—			—			—			—			—			—
Reclassification adjustment for realized gains (losses) included in net income		44			15			29			(348	)		(122	)		(226	)		30			10			20
Net unrealized gains (losses) recognized in other comprehensive income or loss		1,872			655			1,217			(1,030	)		(361	)		(669	)		207			73			134
Foreign currency translation gains (losses)		262			92			170			(348	)		(122	)		(226	)		193			68			125
Change in postretirement benefit costs not yet recognized in net income		134			36			98			(437	)		(153	)		(284	)		(26	)		(9	)		(17	)
Total other comprehensive income (loss)	$	2,268		$	783		$	1,485		$	(1,815	)	$	(636	)	$	(1,179	)	$	374		$	132		$	242

F-27

(16) Commitments and Contingent Liabilities

(a) Chubb and certain of its subsidiaries have been involved in the investigations by various Attorneys General and other regulatory authorities of several states, the U.S. Securities and Exchange Commission, the U.S. Attorney for the Southern District of New York and certain non-U.S. regulatory authorities with respect to certain business practices in the property and casualty insurance industry including (1) potential conflicts of interest and anti-competitive behavior arising from the payment of contingent commissions to brokers and agents and (2) loss mitigation and finite reinsurance arrangements. In connection with these investigations, Chubb and certain of its subsidiaries received subpoenas and other requests for information from various regulators. The Corporation has cooperated fully with these investigations. The Corporation has settled with several state Attorneys General and insurance departments all issues arising out of their investigations. As described in more detail below, the Attorney General of Ohio in August 2007 filed an action against Chubb and certain of its subsidiaries, as well as several other insurers and one broker, as a result of the Ohio Attorney General’s business practices investigation. Although no other Attorney General or regulator has initiated an action against the Corporation, it is possible that such an action may be brought against the Corporation with respect to some or all of the issues that were the focus of the business practice investigations.

The Attorney General of Ohio on August 24, 2007 filed an action in the Court of Common Pleas in Cuyahoga County, Ohio, against Chubb and certain of its subsidiaries, as well as several other insurers and one broker, as a result of the Ohio Attorney General’s business practices investigation. This action alleges violations of Ohio’s antitrust laws. In July 2008, the court denied the Corporation’s and the other defendants’ motions to dismiss the Attorney General’s complaint. In August 2008, the Corporation and the other defendants filed answers to the complaint and discovery is proceeding.

Individual actions and purported class actions arising out of the investigations into the payment of contingent commissions to brokers and agents have been filed in a number of federal and state courts. On August 1, 2005, Chubb and certain of its subsidiaries were named in a putative class action entitled In re Insurance Brokerage Antitrust Litigation in the U.S. District Court for the District of New Jersey (N. J. District Court). This action, brought against several brokers and insurers on behalf of a class of persons who purchased insurance through the broker defendants, asserts claims under the Sherman Act and state law and the Racketeer Influenced and Corrupt Organizations Act (RICO) arising from the alleged unlawful use of contingent commission agreements. On September 28, 2007, the N. J. District Court dismissed the second amended complaint filed by the plaintiffs in the In re Insurance Brokerage Antitrust Litigation in its entirety. In so doing, the court dismissed the plaintiffs’ Sherman Act and RICO claims with prejudice for failure to state a claim, and it dismissed the plaintiffs’ state law claims without prejudice because it declined to exercise supplemental jurisdiction over them. The plaintiffs have appealed the dismissal of their second amended complaint to the U.S. Court of Appeals for the Third Circuit, and that appeal is currently pending.

Chubb and certain of its subsidiaries also have been named as defendants in other putative class actions relating or similar to the In re Insurance Brokerage Antitrust Litigation that have been filed in various state courts or in U.S. district courts between 2005 and 2007. These actions have been subsequently removed and ultimately transferred to the N.J. District Court for consolidation with the In re Insurance Brokerage Antitrust Litigation. These actions are currently stayed.

In the various actions described above, the plaintiffs generally allege that the defendants unlawfully used contingent commission agreements and conspired to reduce competition in the insurance markets. The actions seek treble damages, injunctive and declaratory relief, and attorneys’ fees. The Corporation believes it has substantial defenses to all of the aforementioned legal proceedings and intends to defend the actions vigorously.

The Corporation cannot predict at this time the ultimate outcome of the aforementioned ongoing investigations and legal proceedings, including any potential amounts that the Corporation may be required to pay in connection with them. Nevertheless, management believes that it is likely that the outcome will not have a material adverse effect on the Corporation’s results of operations or financial condition.

(b) Chubb Financial Solutions (CFS), a wholly owned subsidiary of Chubb, participated in derivative financial instruments and has been in run-off since 2003. At December 31, 2009 and 2008, CFS had a derivative contract linked to an equity market index that terminates in 2012 and a few other insignificant derivative contracts.

F-28

CFS’s aggregate exposure, or retained risk, from its derivative contracts is referred to as notional amount. Notional amounts are used to calculate the exchange of contractual cash flows and are not necessarily representative of the potential for gain or loss. Notional amounts are not recorded on the balance sheet. The notional amount of future obligations under CFS’s derivative contracts at December 31, 2009 and 2008 was approximately $340 million.

Future obligations with respect to the derivative contracts are carried at fair value at the balance sheet date and are included in other liabilities. The fair value of future obligations under CFS’s derivative contracts at December 31, 2009 and 2008 was approximately $4 million and $5 million, respectively.

(c) A property and casualty insurance subsidiary issued a reinsurance contract to an insurer that provides financial guarantees on debt obligations. At December 31, 2009, the aggregate principal commitments related to this contract for which the subsidiary was contingently liable amounted to approximately $400 million. These commitments expire by 2023.

(d) The Corporation occupies office facilities under lease agreements that expire at various dates through 2020; such leases are generally renewed or replaced by other leases. Most facility leases contain renewal options for increments ranging from two to ten years. The Corporation also leases data processing, office and transportation equipment. All leases are operating leases.

Rent expense was as follows:

	Years Ended
	December 31
	2009		2008		2007
	(in millions)
Office facilities	$	75	$	79	$	81
Equipment		13		13		12
	$	88	$	92	$	93

At December 31, 2009, future minimum rental payments required under non-cancellable operating leases were as follows:

Years Ending
December 31	(in millions)
2010	$	72
2011		66
2012		57
2013		50
2014		41
After 2014		110
	$	396

(e) The Corporation had commitments totaling $850 million at December 31, 2009 to fund limited partnership investments. These commitments can be called by the partnerships (generally over a period of 5 years or less) to fund certain partnership expenses or the purchase of investments.

(17) Fair Values of Financial Instruments

(a) Fair values of financial instruments are determined using valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Fair values are generally measured using quoted prices in active markets for identical assets or liabilities or other inputs, such as quoted prices for similar assets or liabilities, that are observable, either directly or indirectly. In those instances where observable inputs are not available, fair values are measured using unobservable inputs for the asset or liability. Unobservable inputs reflect the Corporation’s own assumptions about the assumptions that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. Fair value estimates derived from unobservable inputs are affected by the assumptions used, including the discount rates and the estimated amounts and timing of future cash flows. The derived fair value estimates cannot be substantiated by comparison to independent markets and are not necessarily indicative of the amounts that would be realized in a current market exchange. Certain financial instruments, particularly insurance contracts, are excluded from fair value disclosure requirements.

The methods and assumptions used to estimate the fair values of financial instruments are as follows:

 (i) The carrying value of short term investments approximates fair value due to the short maturities of these investments.

 (ii) Fair values for fixed maturities are determined by management, utilizing prices obtained from an independent, nationally recognized pricing service or, in the case of securities for which prices are not provided by a pricing service, from independent brokers. For fixed maturities that have quoted prices in active markets, market quotations are provided. For fixed maturities that do not trade on a daily basis, the pricing service and brokers provide fair value estimates using a variety of inputs including, but not limited to, benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, reference data, prepayment spreads and measures of volatility. Management reviews on an ongoing basis the reasonableness of the methodologies used by the relevant pricing service and brokers. In addition, management, using the prices received for the securities from the pricing service and brokers, determines the aggregate portfolio price performance and reviews it against applicable indices. If management believes that significant discrepancies exist, it will discuss these with the relevant pricing service or broker to resolve the discrepancies.

 (iii) Fair values of equity securities are based on quoted market prices.

 (iv) Fair values of long term debt issued by Chubb are determined by management, utilizing prices obtained from an independent, nationally recognized pricing service.

F-29

The carrying values and fair values of financial instruments were as follows:

	December 31
	2009				2008
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
	(in millions)
Assets
Invested assets
Short term investments	$	1,918	$	1,918	$	2,478	$	2,478
Fixed maturities (Note 4)		36,578		36,578		32,755		32,755
Equity securities		1,433		1,433		1,479		1,479
Liabilities
Long term debt (Note 8)		3,975		4,102		3,975		3,493

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:

Level 1 — Unadjusted quoted prices in active markets for identical assets.

Level 2 — Other inputs that are observable for the asset, either directly or indirectly.

Level 3 — Inputs that are unobservable.

The fair value of fixed maturities and equity securities at December 31, 2009 categorized based upon the lowest level of input that was significant to the fair value measurement was as follows:

	Level 1		Level 2		Level 3		Total
	(in millions)
Fixed maturities	$	—	$	36,427	$	151	$	36,578
Equity securities		1,207		—		226		1,433

(b) The methods and assumptions used to estimate the fair value of the Corporation’s pension plan and other postretirement benefit plan assets, other than assets invested in pooled funds, are similar to the methods and assumptions used for the Corporation’s other financial instruments. The fair value of pooled funds is based on the net asset value of the funds.

Based on the fair value hierarchy, the fair value of the Corporation’s pension plan assets at December 31, 2009, categorized based upon the lowest level of input that was significant to the fair value measurement was follows:

	Level 1		Level 2		Level 3		Total
			(in millions)
Short term investments	$	9	$	24	$	—	$	33
Fixed maturities		—		559		2		561
Equity securities		286		649		—		935
Other assets		16		1		12		29
	$	311	$	1,233	$	14	$	1,558

The fair value of the Corporation’s other postretirement benefit plan assets was $50 million at December 31, 2009. Based on the fair value hierarchy, the fair value of these assets was categorized as level 1 based upon the lowest level of input that was significant to the fair value measurement.

F-30

(18) Shareholders’ Equity

(a) The authorized but unissued preferred shares may be issued in one or more series and the shares of each series shall have such rights as fixed by the Board of Directors.

(b) The activity of Chubb’s common stock was as follows:

	Years Ended December 31
	2009			2008			2007
	(number of shares)
Common stock issued
Balance, beginning of year		371,980,710			374,649,923			411,276,940
Repurchase of shares		—			(4,017,884	)		(41,733,268	)
Share activity under stock-based employee compensation plans		(250	)		1,348,671			5,106,251
Balance, end of year		371,980,460			371,980,710			374,649,923
Treasury stock
Balance, beginning of year		19,726,097			—			—
Repurchase of shares		22,623,775			22,310,886			—
Share activity under stock-based employee compensation plans		(2,377,076	)		(2,584,789	)		—
Balance, end of year		39,972,796			19,726,097			—
Common stock outstanding, end of year		332,007,664			352,254,613			374,649,923

(c) As of December 31, 2009, 22,160,125 shares remained under the share repurchase authorization that was approved by the Board of Directors in December 2009. The authorization has no expiration date.

(d) The property and casualty insurance subsidiaries are required to file annual statements with insurance regulatory authorities prepared on an accounting basis prescribed or permitted by such authorities (statutory basis). For such subsidiaries, statutory accounting practices differ in certain respects from GAAP.

A comparison of shareholders’ equity on a GAAP basis and policyholders’ surplus on a statutory basis is as follows:

	December 31
	2009					2008
	GAAP			Statutory		GAAP			Statutory
	(in millions)
P&C Group	$	17,002		$	14,526	$	14,381		$	12,281
Corporate and other		(1,368	)				(949	)
	$	15,634				$	13,432

A comparison of GAAP and statutory net income (loss) is as follows:

	Years Ended December 31
	2009					2008					2007
	GAAP			Statutory		GAAP			Statutory		GAAP			Statutory
	(in millions)
P&C Group	$	2,324		$	2,357	$	1,997		$	1,963	$	2,992		$	2,859
Corporate and other		(141	)				(193	)				(185	)
	$	2,183				$	1,804				$	2,807

(e) As a holding company, Chubb’s ability to continue to pay dividends to shareholders and to satisfy its obligations, including the payment of interest and principal on debt obligations, relies on the availability of liquid assets, which is dependent in large part on the dividend paying ability of its property and casualty insurance subsidiaries. The Corporation’s property and casualty insurance subsidiaries are subject to laws and regulations in the jurisdictions in which they operate that restrict the amount of dividends they may pay without the prior approval of regulatory authorities. The restrictions are generally based on net income and on certain levels of policyholders’ surplus as determined in accordance with statutory accounting practices. Dividends in excess of such thresholds are considered “extraordinary” and require prior regulatory approval. During 2009, these subsidiaries paid dividends of $1.2 billion to Chubb.

The maximum dividend distribution that may be made by the property and casualty insurance subsidiaries to Chubb during 2010 without prior regulatory approval is approximately $1.5 billion.

F-31

QUARTERLY FINANCIAL DATA

Summarized unaudited quarterly financial data for 2009 and 2008 are shown below. In management’s opinion, the interim financial data contain all adjustments, consisting of normal recurring items, necessary to present fairly the results of operations for the interim periods.

	Three Months Ended
	March 31						June 30						September 30						December 31
	2009			2008			2009			2008			2009			2008			2009			2008
	(in millions except for per share amounts)
Revenues	$	2,965		$	3,489		$	3,266		$	3,354		$	3,320		$	3,303		$	3,465		$	3,075
Losses and expenses		2,535			2,560			2,513			2,725			2,511			2,985			2,495			2,544
Federal and foreign income tax		89			265			202			160			213			54			275			124
Net income	$	341		$	664		$	551		$	469		$	596		$	264		$	695		$	407
Basic earnings per share	$	.96		$	1.80		$	1.55		$	1.29		$	1.70		$	.74		$	2.04		$	1.15
Diluted earnings per share	$	.95		$	1.77		$	1.54		$	1.27		$	1.69		$	.73		$	2.03		$	1.13
Underwriting ratios
Losses to premiums earned		57.3	%		53.4	%		55.7	%		58.7	%		54.2	%		67.9	%		54.6	%		53.9	%
Expenses to premiums written		30.8			30.5			30.2			29.8			31.2			30.2			30.1			30.4
Combined		88.1	%		83.9	%		85.9	%		88.5	%		85.4	%		98.1	%		84.7	%		84.3	%

F-32

THE CHUBB CORPORATION

Schedule I

CONSOLIDATED SUMMARY OF INVESTMENTS — OTHER THAN INVESTMENTS IN RELATED PARTIES

(in millions)

December 31, 2009

					Amount
					at Which
	Cost or				Shown in
	Amortized		Fair		the
Type of Investment	Cost		Value		Balance Sheet
Short term investments	$	1,918	$	1,918	$	1,918
Fixed maturities
United States Government and government agencies and authorities		2,279		2,358		2,358
States, municipalities and political subdivisions		18,911		19,770		19,770
Foreign government and government agencies		5,903		6,113		6,113
Public utilities		929		991		991
All other corporate bonds		7,168		7,346		7,346
Total fixed maturities		35,190		36,578		36,578
Equity securities
Common stocks
Public utilities		101		111		111
Banks, trusts and insurance companies		270		288		288
Industrial, miscellaneous and other		810		999		999
Total common stocks		1,181		1,398		1,398
Non-redeemable preferred stocks		34		35		35
Total equity securities		1,215		1,433		1,433
Other invested assets		2,075		2,075		2,075
Total invested assets	$	40,398	$	42,004	$	42,004

S-1

THE CHUBB CORPORATION

Schedule II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

BALANCE SHEETS — PARENT COMPANY ONLY

(in millions)

December 31

	2009			2008
Assets
Invested Assets
Short Term Investments	$	1,010		$	1,553
Taxable Fixed Maturities (cost $1,272 and $754)		1,313			759
Equity Securities (cost $205 and $451)		202			504
Other Invested Assets		25			—
TOTAL INVESTED ASSETS		2,550			2,816
Investment in Consolidated Subsidiaries		17,079			14,510
Other Assets		183			280
TOTAL ASSETS	$	19,812		$	17,606
Liabilities
Long Term Debt	$	3,975		$	3,975
Dividend Payable to Shareholders		118			118
Accrued Expenses and Other Liabilities		85			81
TOTAL LIABILITIES		4,178			4,174
Shareholders’ Equity
Preferred Stock — Authorized 8,000,000 Shares; $1 Par Value; Issued — None		—			—
Common Stock — Authorized 1,200,000,000 Shares; $1 Par Value; Issued 371,980,460 and 371,980,710 Shares		372			372
Paid-In Surplus		224			253
Retained Earnings		16,235			14,509
Accumulated Other Comprehensive Income (Loss)		720			(735	)
Treasury Stock, at Cost — 39,972,796 and 19,726,097 Shares		(1,917	)		(967	)
TOTAL SHAREHOLDERS’ EQUITY		15,634			13,432
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	19,812		$	17,606

The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto.

S-2

THE CHUBB CORPORATION

Schedule II

(continued)

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENTS OF INCOME — PARENT COMPANY ONLY

(in millions)

Years Ended December 31

	2009			2008			2007
Revenues
Investment Income	$	64		$	79		$	125
Other Revenues		—			4			(5	)
Realized Investment Gains (Losses), Net		88			49			(31	)
TOTAL REVENUES		152			132			89
Expenses
Corporate Expenses		292			282			249
Investment Expenses		3			2			3
Other Expenses		—			4			—
TOTAL EXPENSES		295			288			252
Loss before Federal and Foreign Income Tax and Equity in Net Income of Consolidated Subsidiaries		(143	)		(156	)		(163	)
Federal and Foreign Income Tax (Credit)		(7	)		30			7
Loss before Equity in Net Income of Consolidated Subsidiaries		(136	)		(186	)		(170	)
Equity in Net Income of Consolidated Subsidiaries		2,319			1,990			2,977
NET INCOME	$	2,183		$	1,804		$	2,807

Chubb and its domestic subsidiaries file a consolidated federal income tax return. The federal income tax provision represents an allocation under the Corporation’s tax allocation agreements.

The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto.

S-3

THE CHUBB CORPORATION

Schedule II

(continued)

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENTS OF CASH FLOWS — PARENT COMPANY ONLY

(in millions)

Years Ended December 31

	2009			2008			2007
Cash Flows from Operating Activities
Net Income	$	2,183		$	1,804		$	2,807
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
Equity in Net Income of Consolidated Subsidiaries		(2,319	)		(1,990	)		(2,977	)
Realized Investment Losses (Gains), Net		(88	)		(49	)		31
Other, Net		111			(94	)		15
NET CASH USED IN OPERATING ACTIVITIES		(113	)		(329	)		(124	)
Cash Flows from Investing Activities
Proceeds from Fixed Maturities
Sales		5			—			49
Maturities, Calls and Redemptions		126			92			86
Proceeds from Sales of Equity Securities		308			56			—
Purchases of Fixed Maturities		(651	)		(21	)		(61	)
Decrease (Increase) in Short Term Investments, Net		543			(672	)		(133	)
Capital Contributions to Consolidated Subsidiaries		—			—			(20	)
Dividends Received from Consolidated Insurance Subsidiaries		1,200			2,000			1,550
Distributions Received from Consolidated Non-Insurance Subsidiaries		35			13			40
Other, Net		60			53			(65	)
NET CASH PROVIDED BY INVESTING ACTIVITIES		1,626			1,521			1,446
Cash Flows from Financing Activities
Proceeds from Issuance of Long Term Debt		—			1,200			1,800
Repayment of Long Term Debt		—			(685	)		(600	)
Proceeds from Issuance of Common Stock Under Stock-Based Employee Compensation Plans		34			109			130
Repurchase of Shares		(1,060	)		(1,336	)		(2,185	)
Dividends Paid to Shareholders		(487	)		(471	)		(451	)
Other, Net		—			(9	)		(17	)
NET CASH USED IN FINANCING ACTIVITIES		(1,513	)		(1,192	)		(1,323	)
Net Decrease in Cash		—			—			(1	)
Cash at Beginning of Year		—			—			1
CASH AT END OF YEAR	$	—		$	—		$	—

The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto.

In 2008, Chubb received 2,000,000 shares of common stock of Harbor Point Limited upon conversion of 6% convertible notes. In 2007, Chubb forgave a receivable and related interest in the amount of $216 million in the aggregate due from a consolidated subsidiary. These transactions have been excluded from the statements of cash flows.

S-4

THE CHUBB CORPORATION

Schedule III

CONSOLIDATED SUPPLEMENTARY INSURANCE INFORMATION

(in millions)

	December 31						Year Ended December 31
														Amortization		Other
	Deferred													of Deferred		Insurance
	Policy								Net					Policy		Operating
	Acquisition		Unpaid		Unearned		Premiums		Investment		Insurance			Acquisition		Costs and		Premiums
Segment	Costs		Losses		Premiums		Earned		Income*		Losses			Costs		Expenses**		Written
2009
Property and Casualty Insurance
Personal	$	537	$	2,133	$	1,929	$	3,692			$	1,923		$	1,064	$	101	$	3,657
Commercial		628		11,531		2,583		4,762				2,773			1,290		214		4,660
Specialty		364		8,071		1,614		2,829				1,606			651		95		2,739
Reinsurance Assumed		4		1,104		27		48				(34	)		16		1		21
Investments									$	1,549
	$	1,533	$	22,839	$	6,153	$	11,331	$	1,549	$	6,268		$	3,021	$	411	$	11,077
2008
Property and Casualty Insurance
Personal	$	523	$	2,139	$	1,935	$	3,787			$	2,087		$	1,089	$	105	$	3,826
Commercial		641		11,222		2,641		5,015				3,131			1,313		240		4,993
Specialty		355		7,728		1,666		2,935				1,686			667		93		2,899
Reinsurance Assumed		13		1,278		125		91				(6	)		54		8		64
Investments									$	1,622
	$	1,532	$	22,367	$	6,367	$	11,828	$	1,622	$	6,898		$	3,123	$	446	$	11,782
2007
Property and Casualty Insurance
Personal	$	509	$	2,141	$	1,932	$	3,642			$	1,942		$	1,039	$	106	$	3,709
Commercial		637		10,972		2,718		5,120				2,822			1,301		224		5,083
Specialty		374		8,163		1,748		2,971				1,551			635		90		2,944
Reinsurance Assumed		36		1,347		201		213				(16	)		117		19		136
Investments									$	1,590
	$	1,556	$	22,623	$	6,599	$	11,946	$	1,590	$	6,299		$	3,092	$	439	$	11,872

*	Property and casualty assets are available for payment of losses and expenses for all classes of business; therefore, such assets and the related investment income have not been allocated to the underwriting segments.
**	Other insurance operating costs and expenses does not include other income and charges.

S-5

THE CHUBB CORPORATION

EXHIBITS INDEX

(Item 15(a))

Exhibit
Number				Description
			—	Articles of incorporation and by-laws
	3	.1		Restated Certificate of Incorporation incorporated by reference to Exhibit (3) of the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1996.
	3	.2		Certificate of Amendment to the Restated Certificate of Incorporation incorporated by reference to Exhibit (3) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 1998.
	3	.3		Certificate of Correction of Certificate of Amendment to the Restated Certificate of Incorporation incorporated by reference to Exhibit (3) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 1998.
	3	.4		Certificate of Amendment to the Restated Certificate of Incorporation incorporated by reference to Exhibit (3.1) of the registrant’s Current Report on Form 8-K filed on April 18, 2006.
	3	.5		Certificate of Amendment to the Restated Certificate of Incorporation incorporated by reference to Exhibit (3.1) of the registrant’s Current Report on Form 8-K filed on April 30, 2007.
	3	.6		By-Laws incorporated by reference to Exhibit (3.1) of the registrant’s Current Report on Form 8-K filed on December 10, 2008.
			—	Instruments defining the rights of security holders, including indentures
				The registrant is not filing any instruments evidencing any indebtedness since the total amount of securities authorized under any single instrument does not exceed 10% of the total assets of the registrant and its subsidiaries on a consolidated basis. Copies of such instruments will be furnished to the Securities and Exchange Commission upon request.
			—	Material contracts
	10	.1		Schedule of Salary Actions filed herewith.
	10	.2		Schedule of Salary Actions incorporated by reference to Exhibit 10.1 of the registrant’s Current Report on Form 8-K filed on September 4, 2009.
	10	.3		The Chubb Corporation Annual Incentive Plan (2006) incorporated by reference to Annex A of the registrant’s definitive proxy statement for the Annual Meeting of Shareholders held on April 25, 2006.
	10	.4		Amendment to The Chubb Corporation Annual Incentive Compensation Plan (2006) incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 2008.
	10	.5		The Chubb Corporation Long-Term Incentive Plan (2009) incorporated by reference to Exhibit 99.1 of the registrant’s registration statement on Form S-8 filed on April 28, 2009 (File No. 333-158841).
	10	.6		Form of Performance Unit Award Agreement under The Chubb Corporation Long-Term Incentive Plan (2009) filed herewith.
	10	.7		Form of Restricted Stock Unit Award Agreement under The Chubb Corporation Long-Term Incentive Plan (2009) filed herewith.
	10	.8		Form of Non-Statutory Stock Option Award Agreement under The Chubb Corporation Long-Term Incentive Plan (2009) filed herewith.
	10	.9		Form of Deferred Stock Unit Agreement for Non-Employee Directors under The Chubb Corporation Long-Term Incentive Plan (2009) incorporated by reference to Exhibit 10.2 of the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009.
	10	.10		The Chubb Corporation Long-Term Stock Incentive Plan (2004) incorporated by reference to Annex B of the registrant’s definitive proxy statement for the Annual Meeting of Shareholders held on April 27, 2004.

E-1

Exhibit
Number			Description
	10	.11	Amendment to The Chubb Corporation Long - Term Stock Incentive Plan (2004) incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 2008.
	10	.12	Form of Performance Share Award Agreement under The Chubb Corporation Long-Term Stock Incentive Plan (2004) (for Chief Executive Officer, Vice Chairmen, Executive Vice Presidents and certain Senior Vice Presidents) incorporated by reference to Exhibit (10.2) of the registrant’s Current Report on Form 8-K filed on March 7, 2007.
	10	.13	Form of Performance Share Award Agreement under The Chubb Corporation Long-Term Stock Incentive Plan (2004) (for recipients of performance share awards other than Chief Executive Officer, Vice Chairmen, Executive Vice Presidents and certain Senior Vice Presidents) incorporated by reference to Exhibit (10.3) of the registrant’s Current Report on Form 8-K filed on March 7, 2007.
	10	.14	Form of Restricted Stock Unit Agreement under the Chubb Corporation Long-Term Stock Incentive Plan (2004) (for Chief Executive Officer and Vice Chairmen) incorporated by reference to Exhibit (10.8) of the registrant’s Current Report on Form 8-K filed on March 7, 2007.
	10	.15	Form of Restricted Stock Unit Agreement under The Chubb Corporation Long-Term Stock Incentive Plan (2004) (for Executive Vice Presidents and certain Senior Vice Presidents) incorporated by reference to Exhibit (10.9) of the registrant’s Current Report on Form 8-K filed on March 7, 2007.
	10	.16	Form of Restricted Stock Unit Agreement under The Chubb Corporation Long-Term Stock Incentive Plan (2004) (for recipients of restricted stock unit awards other than Chief Executive Officer, Vice Chairmen, Executive Vice Presidents and certain Senior Vice Presidents) incorporated by reference to Exhibit (10.10) of the registrant’s Current Report on Form 8-K filed on March 7, 2007.
	10	.17	Amendment to The Chubb Corporation Long-Term Stock Incentive Plan (2004) 2005, 2006, 2007, and 2008 Outstanding Restricted Stock Unit Agreements incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 2008.
	10	.18	Form of Non-Statutory Stock Option Award Agreement under The Chubb Corporation Long-Term Stock Incentive Plan (2004) (three year vesting schedule) incorporated by reference to Exhibit (10.7) of the registrant’s Current Report on Form 8-K filed on March 9, 2005.
	10	.19	Form of Non-Statutory Stock Option Award Agreement under The Chubb Corporation Long-Term Stock Incentive Plan (2004) (four year vesting schedule) incorporated by reference to Exhibit (10.8) of the registrant’s Current Report on Form 8-K filed on March 9, 2005.
	10	.20	The Chubb Corporation Long-Term Stock Incentive Plan for Non-Employee Directors (2004) incorporated by reference to Annex C of the registrant’s definitive proxy statement for the Annual Meeting of Shareholders held on April 27, 2004.
	10	.21	Amendment to the registrant’s Long-Term Incentive Plan for Non-Employee Directors (2004) incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 2008.
	10	.22	Form of Performance Share Award Agreement under The Chubb Corporation Long-Term Stock Incentive Plan for Non-Employee Directors (2004) incorporated by reference to Exhibit (10.11) of the registrant’s Current Report on Form 8-K filed on March 7, 2007.

E-2

Exhibit
Number			Description
	10	.23	Form of Stock Unit Agreement under The Chubb Corporation Long-Term Stock Incentive Plan for Non-Employee Directors (2004) incorporated by reference to Exhibit (10.14) of the registrant’s Current Report on Form 8-K filed on March 7, 2007.
	10	.24	Non-Employee Director Special Stock Option Agreement, dated as of December 5, 2002, between The Chubb Corporation and Joel J. Cohen, incorporated by reference to Exhibit (10.1) of the registrant’s Current Report on Form 8-K filed on December 9, 2002.
	10	.25	Non-Employee Director Special Stock Option Agreement, dated as of December 5, 2002, between The Chubb Corporation and Lawrence M. Small, incorporated by reference to Exhibit (10.3) of the registrant’s Current Report on Form 8-K filed on December 9, 2002.
	10	.26	The Chubb Corporation Stock Option Plan for Non-Employee Directors (2001) incorporated by reference to Exhibit C of the registrant’s definitive proxy statement for the Annual Meeting of Shareholders held on April 24, 2001.
	10	.27	The Chubb Corporation Long-Term Stock Incentive Plan (2000) incorporated by reference to Exhibit A of the registrant’s definitive proxy statement for the Annual Meeting of Shareholders held on April 25, 2000.
	10	.28	The Chubb Corporation Long-Term Stock Incentive Plan (1996), as amended, incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 1998.
	10	.29	The Chubb Corporation Stock Option Plan for Non-Employee Directors (1996), as amended, incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 1998.
	10	.30	The Chubb Corporation Stock Option Plan for Non-Employee Directors (1992), as amended, incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 1998.
	10	.31	The Chubb Corporation Asset Managers Incentive Compensation Plan (2005) incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 2004.
	10	.32	Amendment of The Chubb Corporation Asset Managers Incentive Compensation Plan (2005) incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 2008.
	10	.33	Amendment to The Chubb Corporation Asset Managers Incentive Compensation Plan (2005) filed herewith.
	10	.34	The Chubb Corporation Key Employee Deferred Compensation Plan (2005) incorporated by reference to Exhibit (10.9) of the registrant’s Current Report on Form 8-K filed on March 9, 2005.
	10	.35	Amendment to the registrant’s Key Employee Deferred Compensation Plan (2005) incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 2008.
	10	.36	Amendment to the registrant’s Key Employee Deferred Compensation Plan (2005) incorporated by reference to Exhibit (10.1) of the registrant’s Current Report on Form 8-K filed on September 12, 2005.
	10	.37	The Chubb Corporation Executive Deferred Compensation Plan incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 1998.
	10	.38	The Chubb Corporation Deferred Compensation Plan for Directors, as amended, incorporated by reference to Exhibit (10.1) of the registrant’s Current Report on Form 8-K filed on December 11, 2006.
	10	.39	Amendment to the registrant’s Deferred Compensation Plan for Directors, as amended, incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 2008.

E-3

Exhibit
Number				Description
	10	.40		The Chubb Corporation Estate Enhancement Program incorporated by reference to Exhibit (10) of the registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
	10	.41		The Chubb Corporation Estate Enhancement Program for Non-Employee Directors incorporated by reference to Exhibit (10) of the registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
	10	.42		Corporate Aircraft Policy incorporated by reference to Exhibit (10.12) of the registrant’s Current Report on Form 8-K filed on March 9, 2005.
	10	.43		Employment Agreement, dated as of December 1, 2002, between The Chubb Corporation and John D. Finnegan, incorporated by reference to Exhibit (10) of the registrant’s Current Report on Form 8-K filed on January 21, 2003.
	10	.44		Amendment, dated as of December 1, 2003, to Employment Agreement, dated as of December 1, 2002, between The Chubb Corporation and John D. Finnegan, incorporated by reference to Exhibit (10.1) of the registrant’s Current Report on Form 8-K filed on December 2, 2003.
	10	.45		Amendment dated as of September 4, 2008 to Employment Agreement, dated as of January 21, 2003, between The Chubb Corporation and John D. Finnegan, incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 2008.
	10	.46		Change in Control Employment Agreement, dated as of December 1, 2002, between The Chubb Corporation and John D. Finnegan, incorporated by reference to Exhibit (10) of the registrant’s Current Report on Form 8-K filed on January 21, 2003.
	10	.47		Amendment dated as of September 4, 2008 to Change in Control Employment Agreement, dated as of January 21, 2003, between The Chubb Corporation and John D. Finnegan, incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 2008.
	10	.48		Amendment, dated as of December 1, 2003, to Change in Control Employment Agreement, dated as of December 1, 2002, between The Chubb Corporation and John D. Finnegan, incorporated by reference to Exhibit (10.2) of the registrant’s Current Report on Form 8-K filed on December 2, 2003.
	10	.49		Executive Severance Agreement, dated as of December 8, 1995, between The Chubb Corporation and John J. Degnan, incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 1995.
	10	.50		Amendment, dated as of September 4, 2008, to Change in Control Employment Agreement, dated December 6, 1995, between The Chubb Corporation and John J. Degnan, incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 2008.
	10	.51		Offer Letter to Richard G. Spiro dated September 5, 2008, incorporated by reference to Exhibit (10) of the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.
	10	.52		Change in Control Employment Agreement, dated as of October 1, 2008, between The Chubb Corporation and Richard G. Spiro, incorporated by reference to Exhibit (10) of the registrant’s Annual Report on Form 10-K for the year ended December 31, 2008.
	11	.1		Computation of earnings per share included in Note (14) of the Notes to Consolidated Financial Statements.
	12	.1		Computation of ratio of consolidated earnings to fixed charges filed herewith.
	21	.1		Subsidiaries of the registrant filed herewith.
	23	.1		Consent of Independent Registered Public Accounting Firm filed herewith.
			—	Rule 13a-14(a)/15d-14(a) Certifications.

E-4

Exhibit
Number				Description
	31	.1		Certification by John D. Finnegan filed herewith.
	31	.2		Certification by Richard G. Spiro filed herewith.
			—	Section 1350 Certifications.
	32	.1		Certification by John D. Finnegan filed herewith.
	32	.2		Certification by Richard G. Spiro filed herewith.
			—	Interactive Data File
	101	.INS*		XBRL Instance Document
	101	.SCH*		XBRL Taxonomy Extension Schema Document
	101	.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
	101	.LAB*		XBRL Taxonomy Extension Label Linkbase Document
	101	.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document
	101	.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

*  Pursuant to applicable securities laws and regulations, the Corporation is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as the Corporation has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability.

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EX-10.1

Exhibit 10.1

Schedule of
Salary Actions

Name	Current Salary		Increase		Percentage Increase			New Salary*
John D. Finnegan	$	1,275,000	$	50,000		3.92	%	$	1,325,000
Richard G. Spiro	$	750,000	$	37,500		5.00	%	$	787,500

* Effective April 1, 2010.

EX-10.6

Exhibit 10.6

THE CHUBB CORPORATION
LONG-TERM INCENTIVE PLAN (2009)
Performance Unit Award Agreement

     This PERFORMANCE UNIT AWARD AGREEMENT (this “Agreement”), dated as of February 24, 2010, is by and between The Chubb Corporation (the “Corporation”) and                                          (the “Participant”), pursuant to The Chubb Corporation Long-Term Incentive Plan (2009) (the “Plan”). Capitalized terms that are not defined herein shall have the same meanings given to such terms in the Plan. If any provision of this Agreement conflicts with any provision of the Plan (as either may be interpreted from time to time by the Committee), the Plan shall control.

     WHEREAS, pursuant to the provisions of the Plan, the Committee has authorized the grant to the Participant of Performance Units in accordance with the terms and conditions of this Agreement, subject to the acceptance of its terms by the Participant; and

     WHEREAS, the Participant and the Corporation desire to enter into this Agreement to evidence and confirm the grant of such Performance Units on the terms and conditions set forth herein.

     NOW THEREFORE, the Participant and the Corporation agree as follows:

     1. Grant of Performance Units. Pursuant to the provisions of the Plan, the Corporation on the date set forth above (the “Grant Date”) has granted and hereby evidences the grant to the Participant, subject to the terms and conditions set forth herein and in the Plan, of an award of ___Performance Units (the “Award”).

     2. Payment of Earned Performance Units.

          (a) Settlement of Performance Units. Subject to the provisions of this Section 2, Section 4, and Section 5, the Payment Value of each Performance Unit covered by the Award which the Committee determines, in writing, to be earned pursuant to Section 3 shall be paid by the Corporation on a date (the “vesting date”) as soon as administratively practicable after (but no later than 2¹/2 months after the calendar year end coincident with) the end of the Performance Cycle described in Section 3(a). Payments hereunder shall be made in cash, shares of Stock, or a combination thereof, as determined by the Committee in its sole discretion. Notwithstanding the aforementioned, the vesting date shall be the last day of the Performance Cycle if (i) the Participant experiences a Qualifying Termination on or after December 31, 2010 or (ii) the Committee determines, in its discretion, pursuant to Section 4(b), that the Participant will not forfeit his or her rights to Performance Units upon his or her termination of employment for other reasons; in either case, provided the Committee determines, in writing, that Performance Units are to be awarded hereunder.

          (b) Voluntary Deferral. Notwithstanding the provisions of Section 2(a), the Participant may elect, by election filed with the Corporation under its Key Employee Deferred Compensation Plan (2005) (or any successor plan or program) (the “Deferred Compensation Plan”), and on a form acceptable to the Committee, not later than June 30, 2012 and subject to such terms and conditions as the Committee may specify, to have any payment that may become due in respect of Performance Units covered by the Award deferred until such later time as shall be specified in such election.

     3. Vesting Criteria Applicable to Performance Units.

          (a) Performance Cycle. The Performance Cycle for this Award shall commence on January 1, 2010, and shall end on December 31, 2012.

          (b) Performance Goal. The Performance Goal for the Performance Cycle is the total return per share of Stock to the Corporation’s shareholders, inclusive of dividends paid (regardless of whether paid in cash or property, which dividends shall be deemed reinvested in Stock), during the Performance Cycle in comparison to the total return per share of stock, inclusive of dividends paid (regardless of whether paid in cash or property, which dividends shall be deemed reinvested in stock), achieved by the companies (i) that are in the Standard & Poors 500 Index (the “S&P 500”) on the date the Performance Cycle begins and (ii) that continue to file public reports pursuant to the Act for the entirety of the Performance Cycle (such companies, the “Comparison Companies”). For the avoidance of doubt, a company included in the S&P 500 on the date the Performance Cycle commences that is not included in the S&P 500 at the conclusion of the Performance Cycle will be a Comparison Company as long as it files public reports pursuant to the Act for the entire Performance Cycle (and any company first included in the S&P 500 after the start of the Performance Cycle would not be a Comparison Company).

          (c) Comparison of Total Shareholder Return. Except as provided in Section 5, the Performance Units covered by the Award shall be deemed earned based on where the Corporation’s total shareholder return during the Performance Cycle ranks in relation to the total shareholder returns of the Comparison Companies during such period. For purposes of calculating the total shareholder return of the Corporation and the Comparison Companies during the Performance Cycle, the value of each such company’s stock at the beginning and end of the Performance Cycle shall be established based on the average of the averages of the high and low trading prices of the applicable stock on the principal exchange on which the stock trades for the 15 trading days occurring immediately prior to the beginning or end of the Performance Cycle, as the case may be. Such averages for each such company (including the Corporation) shall be referred to herein as the “Beginning Average Value” and the “Ending Average Value.” As soon as practicable after the completion of the Performance Cycle, the total shareholder returns of the Comparison Companies will be calculated and ranked from highest to lowest. The Corporation’s total shareholder return will then be ranked in terms of which percentile it would have placed in among the Comparison Companies. In calculating the total shareholder return with respect to either the Corporation or any of the Comparison Companies, the Committee shall make or shall cause to be made such appropriate adjustments to the calculation of total shareholder return for such entity (including, without limitation, adjusting the Beginning Average Value) as shall be necessary or appropriate to avoid an artificial increase or decrease in such return as a result of a

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stock split (including a reverse stock split), recapitalization, or other similar event affecting the capital structure of such entity that does not involve the issuance of the entity’s securities in exchange for money, property, or other consideration.

          (d) Percentage of Performance Units Earned. The extent to which Performance Units shall become earned on the vesting date described in Section 2(a) shall be determined according to the following schedule:

Relative	Percent of
Performance	Performance
Level Percentile	Units Earned
85th or higher		200	%
50th		100	%
25th		50	%
Under 25th		0	%

To the extent that the Corporation’s total shareholder return ranks in a percentile between the 25th and the 50th percentile, or between the 50th and the 85th percentile, of comparative performance, then the number of Performance Units earned on the vesting date shall be determined by multiplying the relative percentile of comparative performance achieved by the Corporation by two (e.g., if the Corporation’s total shareholder return would have placed in the 40th percentile, then 80% of the Performance Units covered by the Award become earned on the vesting date; if the Corporation’s total shareholder return would have placed in the 75th percentile, then 150% of the Performance Units covered by the Award become earned on the vesting date).

          4. Termination of Employment. Except as provided in this Section 4 or in Section 5, the Participant shall not have any right to any payment hereunder unless the Participant is employed by the Corporation or a Subsidiary on the date the Performance Units subject to this Award are settled pursuant to Section 2(a) (or would have been settled without regard to any other provision of Section 2).

          (a) Qualifying Termination. If the Participant’s employment terminates by reason of a Qualifying Termination on or after December 31, 2010, the Participant shall be entitled to payment in respect of the Performance Units covered by the Award. Any payment made pursuant to a Qualifying Termination or pursuant to an employment agreement shall be in an amount equal to the same Payment Value (without pro-ration) in respect of the Performance Units covered by the Award as would have been payable, and at the same time and subject to the same conditions, had the Participant’s employment continued until the end of the Performance Cycle.

          (b) Termination for any Other Reason. Unless otherwise determined by the Committee, if the Participant’s employment is terminated prior to the date on which the Performance Units subject to this Award are settled pursuant to Section 2(a) (or would have been settled without regard to any other provision of Section 2) for any reason other than a Qualifying

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Termination occurring on or after December 31, 2010, all of the Participant’s rights to Performance Units covered by the Award shall be immediately forfeited and canceled without further action by the Corporation or the Participant as of the date of such termination of employment. Notwithstanding the preceding sentence, the Participant’s Performance Units shall be immediately forfeited and canceled without further action by the Corporation or the Participant upon the Participant’s termination of employment for Cause. For purposes of the Award, the term “Retirement” shall mean a termination of the Participant’s employment other than for Cause at or after the Participant’s normal retirement age or earliest retirement date, in each case as specified in the Pension Plan of The Chubb Corporation or its successor (the “Pension Plan”). Accordingly, all of the Participant’s Performance Units shall be forfeited and canceled without further action by the Corporation or the Participant as of the date a Participant is terminated for Cause, whether prior to, on, or after the Participant’s normal retirement age or earliest retirement date, in each case as specified in the Pension Plan.

          (c) Transfers between the Corporation and Subsidiaries; Leaves, Other Absences and Suspension. Transfer from the Corporation to a Subsidiary, from a Subsidiary to the Corporation, or from one Subsidiary to another shall not be considered a termination of employment. Any question regarding whether a Participant’s employment has terminated in connection with a leave of absence or other absence from active employment shall be determined by the Committee, in its sole discretion, taking into account the provisions of applicable law and the Corporation’s generally applicable employment policies and practices. The Committee also may suspend the operation of the termination of employment provisions of this Agreement for such period and upon such terms and conditions as it may deem necessary or appropriate to further the interests of the Corporation.

     5. Change in Control. Notwithstanding anything in Section 2 or 3 to the contrary, Section 9 of the Plan shall apply in the event of a Change in Control.

     6. Adjustment in Capitalization. In the event that the Committee shall determine that any stock dividend, stock split, share combination, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Stock at a price substantially below fair market value, or other similar corporate event affects the Stock such that an adjustment is required in order to preserve, or to prevent the enlargement of, the benefits or potential benefits intended to be made available under this Award, then the Committee shall, in such manner as the Committee may deem equitable (in its sole discretion), adjust any or all of the number and kind of Performance Units subject to this Award and/or, if deemed appropriate, make provision for a cash payment to the person holding this Award; provided, however, that, unless the Committee determines otherwise, the number of Performance Units subject to this Award always shall be a whole number.

     7. Restrictions on Transfer. Performance Units may not be sold, assigned, hypothecated, pledged, or otherwise transferred or encumbered in any manner except (i) by will or the laws of descent and distribution or (ii) to a “Permitted Transferee”(as defined in Section 11(c) of the Plan) with the permission of, and subject to such conditions as may be imposed by, the Committee.

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     8. No Rights as a Shareholder. Until shares of Stock are issued, if at all, in satisfaction of the Corporation’s obligations under this Award, in the time and manner specified in Section 2 or 5, the Participant shall have no rights as a shareholder.

     9. Notice. Any notice given hereunder to the Corporation shall be addressed to The Chubb Corporation, Attention Secretary, 15 Mountain View Road, P.O. Box 1615, Warren, New Jersey 07061-1615, and any notice given hereunder to the Participant shall be addressed to the Participant at the Participant’s address as shown on the records of the Corporation.

     10. Restrictive Covenants. As a condition to the receipt of the Award made hereby, the Participant agrees to be bound by the terms and conditions hereof and of the Plan, including the following restrictive covenants:

          (a) Non-Disclosure. The Participant shall not, without prior written authorization from the Committee, disclose to anyone outside the Corporation, or use (other than in the Corporation’s or any of the Subsidiaries’ business), any confidential information or material relating to the business of the Corporation or any of the Subsidiaries that is acquired by the Participant either during or after employment with the Corporation or any of the Subsidiaries.

          (b) Non-Solicitation. Unless the Participant has received prior written authorization from the Committee, the Participant shall not during his or her employment or service with the Corporation or any of the Subsidiaries and for a period of one (1) year following any termination of such employment or service relationship (the “Restricted Period”):

          (i) Directly or indirectly, employ, solicit, persuade, encourage, or induce any individual employed by the Corporation or any of the Subsidiaries to become employed by or associated with any person or entity other than the Corporation or any of the Subsidiaries; or

          (ii) Directly or indirectly, solicit business on behalf of a Competitive Business from any Customer with whom the Participant has had, or employees reporting to the Participant have had, personal contact or dealings with on behalf of the Corporation or any of the Subsidiaries during the one (1) year period preceding the Restricted Period.

          (c) Non-Competition. Unless the Participant has received prior written authorization from the Committee, the Participant shall not, whether during his or her employment or service with the Corporation or any of the Subsidiaries or during the Restricted Period, directly or indirectly compete with the business of the Corporation or any of the Subsidiaries by becoming an officer, agent, employee, consultant, partner, or director of a Competitive Business, or otherwise render services to or assist or hold an interest (except as a less than one (1) percent shareholder of a public company) in any Competitive Business. Notwithstanding the foregoing, it shall not be a violation of this Section 10(c) for the Participant to serve as a director for any entity which would otherwise be a Competitive Business if the Participant was serving as a director for such entity at the time of his or her termination of employment in compliance with the Corporation’s Policy Statement on Conflict of Interest.

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          “Customer” shall mean a person or entity to which the Corporation or any of the Subsidiaries is at the time providing services (which includes the provision of insurance or any other contractual obligation under any products of the Corporation or any of the Subsidiaries); for avoidance of doubt, it is understood and agreed that the term “Customer” includes any broker, agent, or other third party acting for or on behalf of such broker or agent.

          “Competitive Business” shall mean any person or entity (including any joint venture, partnership, firm, corporation or limited liability company) that engages, directly or indirectly, in the property and casualty insurance business, including, but not limited to, commercial insurance, personal insurance, specialty insurance, surety, excess and surplus lines, and/or reinsurance, and/or any other business that is a significant business of, the Corporation and the Subsidiaries as of the date of the Participant’s termination of employment or service with the Corporation or any of the Subsidiaries; provided however, that a business set forth above shall not be considered a “Competitive Business” in the event that, as of the date of the Participant’s termination of employment or service with the Corporation or any of the Subsidiaries, such business is no longer a business of the Corporation or any of the Subsidiaries.

          (d) Inventions. A Participant shall disclose promptly and assign to the Corporation all right, title, and interest in any invention or idea, patentable or not, made or conceived by the Participant during employment by the Corporation or any of the Subsidiaries, relating in any manner to the actual or anticipated business, research or development work of the Corporation or any of the Subsidiaries and shall do anything reasonably necessary to enable the Corporation or any of the Subsidiaries to secure a patent, copyright or any other intellectual property rights where appropriate in the United States and in foreign countries.

          (e) Relief with Respect to Violations of Covenants. Failure to comply with the provisions of this Section 10 at any point before payment in respect of earned Performance Units covered by the Award is made pursuant to the provisions of Section 2 or 5 shall cause all Performance Units covered by the Award to be canceled and rescinded without any payment therefor. For the avoidance of doubt, following a failure to comply with this Section 10, payments in respect of any portion of the Performance Units covered by the Award that have been deferred under the Deferred Compensation Plan in accordance with Section 2 hereof shall be forfeited, and accordingly the Participant shall have no further right to receive any such payment(s). In the event that all or any portion of the Performance Units covered by this Award shall have been settled in accordance with the terms of this Agreement within twelve (12) months of the date on which any breach by the Participant of any of the provisions of this Section 10 shall have first occurred, the Committee may require that the Participant repay (with interest or appreciation (if any), as applicable, determined up to the date payment is made), and the Participant shall promptly repay, to the Corporation the value of any cash or property (including the Fair Market Value of any Stock) conveyed to the Participant within such period in respect of such Performance Units. Additionally, the Participant agrees that the Corporation shall be entitled to an injunction, restraining order, or such other equitable relief restraining the Participant from committing any violation of the covenants or obligations contained in this Section 10. These rescission rights and injunctive remedies are cumulative and are in addition to any other rights and remedies the Corporation may have at law or in equity. The Participant acknowledges and agrees that the covenants and obligations in this Section 10 relate to special,

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unique, and extraordinary matters and that a violation or threatened violation of any of the terms of such covenants or obligations will cause the Corporation and the Subsidiaries irreparable injury for which adequate remedies are not available at law.

          (f) Reformation. The Participant agrees that the provisions of this Section 10 are necessary and reasonable to protect the Corporation in the conduct of its business. If any restriction contained in this Section 10 shall be deemed to be invalid, illegal, or unenforceable by reason of the extent, duration, or geographical scope hereof, or otherwise, then the court making such determination shall have the right to reduce such extent, duration, geographical scope, or other provisions hereof, and in its reduced form such restriction shall then be enforceable in the manner contemplated hereby.

     11. Withholding. The Corporation shall have the right to deduct from all amounts paid to the Participant in cash in respect of Performance Units covered by the Award any amount of taxes required by law to be withheld as may be necessary in the opinion of the Corporation to satisfy tax withholding required under the laws of any country, state, province, city, or other jurisdiction. In the case of any payments of Performance Units covered by the Award in the form of Stock, at the Committee’s discretion, the Participant shall be required to either pay to the Corporation the amount of any taxes required to be withheld with respect to such Stock or, in lieu thereof, the Corporation shall have the right to retain (or the Participant may be offered the opportunity to elect to tender) the number of shares of Stock whose Fair Market Value equals such amount required to be withheld.

     12. Committee Discretion; Delegation. Notwithstanding anything contained in this Agreement to the contrary, the Committee may take any action that is authorized under the terms of the Plan that is not contrary to the express terms hereof, including permitting the Participant to receive (upon such terms and conditions as the Committee shall determine) all or a portion of the Performance Units covered by the Award, up to the maximum amount that would have been payable, despite the termination of the Participant’s employment prior to the settlement date specified pursuant to Section 2(a). Nothing in this Agreement shall limit or in any way restrict the power of the Committee, consistent with the terms of the Plan, to delegate any of the powers reserved to it hereunder to such person or persons as it shall designate from time to time.

     13. No Right to Continued Employment. Neither the execution and delivery hereof nor the granting of the Award shall constitute or be evidence of any agreement or understanding, express or implied, on the part of the Corporation or any of the Subsidiaries to employ or continue the employment of the Participant for any period.

     14. Governing Law. The Award and the legal relations between the parties shall be governed by and construed in accordance with the laws of the State of New Jersey (without reference to the principles of conflicts of law).

     15. Signature in Counterpart. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signature thereto and hereto were upon the same instrument. This Agreement may be accepted by the Participant by means of manual signature, electronic signature, or electronic acceptance.

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     16. Binding Effect; Benefits. This Agreement shall be binding upon and inure to the benefit of the Corporation and the Participant and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the Corporation or the Participant or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

     17. Amendment. The Committee may affirmatively act to amend, modify, or terminate this Agreement at any time prior to payment in any manner not inconsistent with the terms of the Plan. Any such action by the Committee shall be subject to the Participant’s consent if the Committee determines that such action would have a materially adverse effect on the Participant’s rights under such Award, whether in whole or in part. Notwithstanding the foregoing, the Committee, in its sole discretion, may amend an Award if it determines such amendment is necessary or advisable for the Corporation to comply with applicable law (including Section 409A of the Code), regulation, rule, or accounting standard. As soon as is administratively practicable following the date of any such amendment to this Agreement, the Corporation shall notify the Participant of the amendment; provided, however, that failure to provide such notice shall not invalidate or otherwise impair the enforceability of such amendment.

     18. Sections and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

     IN WITNESS WHEREOF, the Corporation, by its duly authorized officer, and the Participant have executed this Agreement in duplicate as of the day and year first above written.

THE CHUBB CORPORATION
By:
By:
	Participant

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EX-10.7

Exhibit 10.7

THE CHUBB CORPORATION
LONG-TERM INCENTIVE PLAN (2009)

RESTRICTED STOCK UNIT AGREEMENT

     This RESTRICTED STOCK UNIT AGREEMENT, dated as of February 24, 2010, is by and between The Chubb Corporation (the “Corporation”) and                                          (the “Participant”), pursuant to The Chubb Corporation Long-Term Incentive Plan (2009) (the “Plan”). Capitalized terms that are not defined herein shall have the same meanings given to such terms in the Plan. If any provision of this Agreement conflicts with any provision of the Plan (as either may be interpreted from time to time by the Committee), the Plan shall control.

     WHEREAS, pursuant to the provisions of the Plan, the Committee has authorized the grant to the Participant of Restricted Stock Units in accordance with the terms and conditions of this Agreement, subject to the acceptance of its terms by the Participant; and

     WHEREAS, the Participant and the Corporation desire to enter into this Agreement to evidence and confirm the grant of such Restricted Stock Units on the terms and conditions set forth herein.

     NOW, THEREFORE, the Participant and the Corporation agree as follows:

     1. Grant of Restricted Stock Units. Pursuant to the provisions of the Plan, the Corporation on the date set forth above (the “Grant Date”) has granted and hereby evidences the grant to the Participant, subject to the terms and conditions set forth herein and in the Plan, of an award of ___Restricted Stock Units (the “Award”).

     2. Vesting and Rights as a Shareholder. It is understood and agreed that the grant of the Award evidenced hereby is subject to the following conditions:

          (a) Restrictions on Transfer. Until settlement of the Restricted Stock Units in accordance with Section 6, the Restricted Stock Units may not be sold, assigned, hypothecated, pledged or otherwise transferred or encumbered in any manner except (i) by will or the laws of descent and distribution or (ii) to a “Permitted Transferee” (as defined in Section 11(c) of the Plan) with the permission of, and subject to such conditions as may be imposed by, the Committee.

          (b) Restriction Period. The Restriction Period applicable to the Restricted Stock Units covered by the Award shall begin on the date hereof and, except as otherwise provided in Section 3 or 4, shall, subject to the Participant’s continued employment from the Grant Date, lapse on the third anniversary of the Grant Date (such date to be hereafter referred to as the “Vesting Date”).

          (c) No Rights as a Shareholder. Until shares of Stock are issued, if at all, in satisfaction of the Corporation’s obligations under this Award, in the time and manner provided in Section 6, the Participant shall have no rights as a shareholder.

          (d) Dividend Equivalents. Without limiting the generality of the foregoing, until settlement of the Restricted Stock Units in accordance with Section 6, as soon as practicable after cash dividends are paid on the Stock, the Participant shall be paid an amount in cash equal to the amount of dividends paid on that number of shares of the Stock as is equal to the number of the Participant’s Restricted Stock Units. In any event, such payments shall be made by the March 15th following the year in which the actual dividends are paid on shares of Stock.

     3. Termination of Employment.

          (a) Qualifying Termination. If the Participant’s employment terminates by reason of a Qualifying Termination during the Restriction Period, the Restriction Period shall lapse as to (and there shall become vested and non-forfeitable) that number of Restricted Stock Units equal to the product of (i) the number of Restricted Stock Units covered by the Award and (ii) a fraction, the numerator of which is the number of full calendar months during the Restriction Period that the Participant was employed and the denominator of which is 36. The remainder of the Restricted Stock Units covered by the Award shall be forfeited and canceled without further action by the Corporation or the Participant as of the date of such termination.

          (b) Termination for any Other Reason. If the Participant’s employment terminates for any reason other than a Qualifying Termination during the Restriction Period, all of the unvested Restricted Stock Units covered by the Award shall be forfeited and canceled without further action by the Corporation or the Participant as of the date of such termination. For purposes of the Award, the term “Retirement” shall mean a termination of the Participant’s employment other than for Cause at or after the Participant’s normal retirement age or earliest retirement date, in each case as specified in the Pension Plan of The Chubb Corporation or its successor (the “Pension Plan”). Accordingly, all of the unvested Restricted Stock Units covered by the Award shall be forfeited and canceled without further action by the Corporation or the Participant as of the date a Participant is terminated for Cause, whether prior to, on, or after the Participant’s normal retirement age or earliest retirement date, in each case as specified in the Pension Plan.

          (c) Transfers between the Corporation and Subsidiaries; Leaves, Other Absences and Suspension. Transfer from the Corporation to a Subsidiary, from a Subsidiary to the Corporation, or from one Subsidiary to another shall not be considered a termination of employment. Any question regarding whether a Participant’s employment has terminated in connection with a leave of absence or other absence from active employment shall be determined by the Committee, in its sole discretion, taking into account the provisions of applicable law and the Corporation’s generally applicable employment policies and practices. The Committee also may suspend the operation of the termination of employment provisions of this Agreement for such period and upon such terms and conditions as it may deem necessary or appropriate to further the interests of the Corporation.

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     4. Change in Control. Notwithstanding anything in Section 6 to the contrary, Section 9 of the Plan shall apply in the event of a Change in Control.

     5. Adjustment in Capitalization. In the event that the Committee shall determine that any stock dividend, stock split, share combination, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Stock at a price substantially below fair market value, or other similar corporate event affects the Stock such that an adjustment is required in order to preserve, or to prevent the enlargement of, the benefits or potential benefits intended to be made available under this Award, then the Committee shall, in such manner as the Committee may deem equitable (in its sole discretion), adjust any or all of the number and kind of units subject to this Award and/or, if deemed appropriate, make provision for a cash payment to the person holding this Award; provided, however, that, unless the Committee determines otherwise, the number of Restricted Stock Units subject to this Award always shall be a whole number.

     6. Settlement of Restricted Stock Units. Subject to the provisions of Section 4 and this Section 6, the Corporation shall deliver to the Participant (or, if applicable, the Participant’s Designated Beneficiary or legal representative) that number of shares of Stock as is equal to the number of Restricted Stock Units covered by the Award that have become vested and nonforfeitable within 90 days after the earlier of (i) death, (ii) Disability, (iii) Separation from Service, or (iv) the Vesting Date.

     Notwithstanding the foregoing, if the Participant is (or is reasonably expected to be) a “covered employee” within the meaning of Section 162(m) of the Code for the calendar year in which delivery of Stock would ordinarily be made to the Participant, the Corporation shall delay delivery to the Participant of that portion of the shares of Stock for which the Corporation reasonably believes that Section 162(m) of the Code will preclude the Corporation from taking a compensation expense deduction until the Participant’s Separation from Service.

     Delivery of shares upon a Separation from Service under this Section shall be subject to the six month delay rule in Section 6(d) of the Plan, if applicable.

     In accordance with terms and conditions established by the Committee, the Participant may be eligible to defer delivery of shares under the terms of the Corporation’s Key Employee Deferred Compensation Plan (2005) or its successor.

     7. Notice. Any notice given hereunder to the Corporation shall be addressed to The Chubb Corporation, Attention: Secretary, 15 Mountain View Road, P.O. Box 1615, Warren, New Jersey 07061-1615, and any notice given hereunder to the Participant shall be addressed to the Participant at the Participant’s address as shown on the records of the Corporation.

     8. Restrictive Covenants. As a condition to the receipt of the Award made hereby, the Participant agrees to be bound by the terms and conditions hereof and of the Plan, including the following restrictive covenants:

          (a) Non-Disclosure. The Participant shall not, without prior written authorization from the Committee, disclose to anyone outside the Corporation, or use (other than in the Corporation’s or any of the Subsidiaries’ business), any confidential information or

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material relating to the business of the Corporation or any of the Subsidiaries that is acquired by the Participant either during or after employment with the Corporation or any of the Subsidiaries.

          (b) Non-Solicitation. Unless the Participant has received prior written authorization from the Committee, the Participant shall not during his or her employment or service with the Corporation or any of the Subsidiaries and for a period of one (1) year following any termination of such employment or service relationship (the “Restricted Period”):

               (i) Directly or indirectly, employ, solicit, persuade, encourage, or induce any individual employed by the Corporation or any of the Subsidiaries to become employed by or associated with any person or entity other than the Corporation or any of the Subsidiaries; or

               (ii) Directly or indirectly, solicit business on behalf of a Competitive Business from any Customer with whom the Participant has had, or employees reporting to the Participant have had, personal contact or dealings with on behalf of the Corporation or any of the Subsidiaries during the one (1) year period preceding the Restricted Period.

          (c) Non-Competition. Unless the Participant has received prior written authorization from the Committee, the Participant shall not, whether during his or her employment or service with the Corporation or any of the Subsidiaries or during the Restricted Period, directly or indirectly compete with the business of the Corporation or any of the Subsidiaries by becoming an officer, agent, employee, consultant, partner or director of a Competitive Business, or otherwise render services to or assist or hold an interest (except as a less than one (1) percent shareholder of a public company) in any Competitive Business. Notwithstanding the foregoing, it shall not be a violation of this Section 8(c) for the Participant to serve as a director for any entity which would otherwise be a Competitive Business if the Participant was serving as a director for such entity at the time of his or her termination of employment in compliance with the Corporation’s Policy Statement on Conflict of Interest.

          “Customer” shall mean a person or entity to which the Corporation or any of the Subsidiaries is at the time providing services (which includes the provision of insurance or any other contractual obligation under any products of the Corporation or any of the Subsidiaries); for avoidance of doubt, it is understood and agreed that the term “Customer” includes any broker, agent, or other third party acting for or on behalf of such broker or agent.

          “Competitive Business” shall mean any person or entity (including any joint venture, partnership, firm, corporation or limited liability company) that engages, directly or indirectly, in the property and casualty insurance business, including, but not limited to, commercial insurance, personal insurance, specialty insurance, surety, excess and surplus lines, and/or reinsurance, and/or any other business that is a significant business of, the Corporation and the Subsidiaries as of the date of the Participant’s termination of employment or service with the Corporation or any of the Subsidiaries; provided however, that a business set forth above shall not be considered a “Competitive Business” in the event that, as of the date of the Participant’s termination of employment or service with the Corporation or any of the Subsidiaries, such business is no longer a business of the Corporation or any of the Subsidiaries.

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          (d) Inventions. A Participant shall disclose promptly and assign to the Corporation all right, title, and interest in any invention or idea, patentable or not, made or conceived by the Participant during employment by the Corporation or any of the Subsidiaries, relating in any manner to the actual or anticipated business, research or development work of the Corporation or any of the Subsidiaries and shall do anything reasonably necessary to enable the Corporation or any of the Subsidiaries to secure a patent, copyright or any other intellectual property rights where appropriate in the United States and in foreign countries.

          (e) Relief with Respect to Violations of Covenants. Failure to comply with the provisions of this Section 8 at any point before the Restricted Stock Units covered by the Award are settled in accordance with Section 6 of this Agreement shall cause such Restricted Stock Units to be canceled and rescinded without any payment therefor. For the avoidance of doubt, following a failure to comply with this Section 8, all shares of Stock in respect of any portion of the Restricted Stock Units covered by the Award for which delivery has been deferred under the Deferred Compensation Plan in accordance with Section 2 hereof shall be forfeited, and accordingly the Participant shall have no further right to delivery or payment in respect of any such shares. In the event that all or any portion of the Restricted Stock Units covered by this Award shall have been settled in accordance with the terms of this Agreement within twelve (12) months of the date on which any breach by the Participant of any of the provisions of this Section 8 shall have first occurred, the Committee may require that the Participant repay (with appreciation (if any), determined up to the date repayment is made), and the Participant shall promptly repay, to the Corporation the Fair Market Value of any Stock conveyed to the Participant within such period in respect of such Restricted Stock Units. Additionally, the Participant agrees that the Corporation shall be entitled to an injunction, restraining order or such other equitable relief restraining the Participant from committing any violation of the covenants or obligations contained in this Section 8. These rescission rights and injunctive remedies are cumulative and are in addition to any other rights and remedies the Corporation may have at law or in equity. The Participant acknowledges and agrees that the covenants and obligations in this Section 8 relate to special, unique and extraordinary matters and that a violation or threatened violation of any of the terms of such covenants or obligations will cause the Corporation and the Subsidiaries irreparable injury for which adequate remedies are not available at law.

          (f) Reformation. The Participant agrees that the provisions of this Section 8 are necessary and reasonable to protect the Corporation in the conduct of its business. If any restriction contained in this Section 8 shall be deemed to be invalid, illegal or unenforceable by reason of the extent, duration, or geographical scope hereof, or otherwise, then the court making such determination shall have the right to reduce such extent, duration, geographical scope, or other provisions hereof, and in its reduced form such restriction shall then be enforceable in the manner contemplated hereby.

     9. Withholding. At the Committee’s discretion, the Participant shall be required to either pay to the Corporation the amount of any taxes required by law to be withheld as may be necessary in the opinion of the Corporation to satisfy tax withholding required under the laws of any country, state, province, city, or other jurisdiction with respect to Stock deliverable hereunder or, in lieu thereof, the Corporation shall have the right to retain (or the Participant may be offered the opportunity to elect to tender) the number of shares of Stock whose Fair Market Value equals such amount required to be withheld.

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     10. Committee Discretion; Delegation. Notwithstanding anything contained in this Agreement to the contrary, the Committee, in its sole discretion and in accordance with the terms of the Plan, may take any action that is authorized under the terms of the Plan that is not contrary to the express terms hereof, including accelerating the lapse of the Restriction Period with respect to all or any portion of the Restricted Stock Units covered by the Award, at such times (including, without limitation, upon or in connection with the Participant’s termination of employment) and upon such terms and conditions as the Committee shall determine. Nothing in this Agreement shall limit or in any way restrict the power of the Committee, consistent with the terms of the Plan, to delegate any of the powers reserved to it hereunder to such person or persons as it shall designate from time to time.

     11. No Right to Continued Employment. Neither the execution and delivery hereof nor the granting of the Award shall constitute or be evidence of any agreement or understanding, express or implied, on the part of the Corporation or any of the Subsidiaries to employ or continue the employment of the Participant for any period.

     12. Governing Law. The Award and the legal relations between the parties shall be governed by and construed in accordance with the laws of the State of New Jersey (without reference to the principles of conflicts of law).

     13. Signature in Counterpart. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signature thereto and hereto were upon the same instrument. This Agreement may be accepted by the Participant by means of an electronic acceptance.

     14. Binding Effect; Benefits. This Agreement shall be binding upon and inure to the benefit of the Corporation and the Participant and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the Corporation or the Participant or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

     15. Amendment. The Committee may affirmatively act to amend, modify, or terminate this Agreement at any time prior to payment in any manner not inconsistent with the terms of the Plan. Any such action by the Committee shall be subject to the Participant’s consent if the Committee determines that such action would have a materially adverse effect on the Participant’s rights under such Award, whether in whole or in part. Notwithstanding the foregoing, the Committee, in its sole discretion, may amend an Award if it determines such amendment is necessary or advisable for the Corporation to comply with applicable law (including Section 409A of the Code), regulation, rule, or accounting standard. As soon as is administratively practicable following the date of any such amendment to this Agreement, the Corporation shall notify the Participant of the amendment; provided, however, that failure to provide such notice shall not invalidate or otherwise impair the enforceability of such amendment.

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     16. Sections and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

     IN WITNESS WHEREOF, the Corporation, by its duly authorized officer, and the Participant have executed this Agreement in duplicate as of the day and year first above written.

THE CHUBB CORPORATION
By:
By:
	Participant

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EX-10.8

Exhibit 10.8

THE CHUBB CORPORATION
LONG-TERM INCENTIVE PLAN (2009)

Non-statutory Stock Option Award Agreement [for Participants in Canada]

     This NON-STATUTORY STOCK OPTION AWARD AGREEMENT, dated as of February 25, 2010, is by and between The Chubb Corporation (the “Corporation”) and [                    ] (the “Participant”), pursuant to The Chubb Corporation Long-Term Incentive Plan (2009) (the “Plan”). Capitalized terms that are not defined herein shall have the same meanings given to such terms in the Plan. If any provision of this Agreement conflicts with any provision of the Plan (as either may be interpreted from time to time by the Committee), the Plan shall control.

     WHEREAS, pursuant to the provisions of the Plan, the Committee has authorized the grant to the Participant of Non-statutory Stock Options in accordance with the terms and conditions of this Agreement, subject to the acceptance of its terms by the Participant; and

     WHEREAS, the Participant and the Corporation desire to enter into this Agreement to evidence and confirm the grant of such Non-statutory Stock Options on the terms and conditions set forth herein.

     NOW THEREFORE, the Participant and the Corporation agree as follows:

     1. Grant of Options; Exercise Price. Pursuant to the provisions of the Plan, on the date set forth above (the “Grant Date”), the Corporation has granted and hereby evidences the grant to the Participant, subject to the terms and conditions set forth herein and in the Plan, of options to purchase from the Corporation [                    ] shares of Stock (the “Option”). The exercise price for each share of Stock covered by the Option shall be equal to $[US ___.___], which was the Fair Market Value of the Stock on the Grant Date. Upon any exercise of the Options, the Corporation shall cause a book entry account maintained for the Participant to be credited for the number of shares of Stock to be issued to the Participant (or shall evidence the issuance of Stock by such other reasonable method as the Committee may determine in its sole discretion).

     2. Exercisability. Except as provided in Sections 5 and 6, and subject to the Participant’s continued employment with the Corporation or a Subsidiary through the applicable vesting date, the Options shall become vested and exercisable in accordance with the following schedule:

Date	Options Vested & Exercisable
1st anniversary of Grant Date	1/3 of the Options
2nd anniversary of Grant Date	1/3 of the Options
3rd anniversary of Grant Date	1/3 of the Options

1

     Once vested in accordance with the provisions of this Agreement, Options may be exercised at any time, and from time to time, prior to the date such Options terminate as determined under Section 3(a) or 5. Options may only be exercised with respect to full shares of Stock and no fractional shares of Stock shall be issued. Any exercise of the Option shall be made by giving the Corporation or its designee written notice of exercise specifying the number of shares of Stock to be purchased. The notice of exercise shall be accompanied by tender to the Corporation of the full purchase price of said shares and any Tax-Related Items (as defined in Section 11 below). Payment of the purchase price of the shares of Stock shall be made in cash, check, in a combination of the foregoing, or by any other method or procedure as shall be permitted by the Plan or the Committee; provided, however, that the Committee may, in its sole discretion, prohibit or limit the use of shares of Stock as part or full payment of the purchase price and any Tax-Related Items.

     3. Conditions Applicable to Options. It is understood and agreed that the Option is subject to the following conditions:

     (a) Normal Termination of Options. The Options shall not in any event be exercisable on or after and shall be forfeited as of the tenth anniversary of the Grant Date.

     (b) Restrictions on Transfer. The Options may not be sold, assigned, hypothecated, pledged or otherwise transferred or encumbered in any manner except by will or the laws of descent and distribution.

     (c) No Rights as a Shareholder. Neither the Participant nor any legal representative, legatee, or distributee shall be deemed to be a holder of or possess any shareholder rights with respect to any shares of Stock subject to the Option prior to the issuance of such shares upon exercise of the Option.

     4. Adjustment in Capitalization. In the event that the Committee shall determine that any stock dividend, stock split, share combination, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Stock at a price substantially below Fair Market Value, or other similar corporate event affects the Stock such that an adjustment is required in order to preserve, or to prevent the enlargement of, the benefits or potential benefits intended to be made available under this Award, then the Committee shall, in such manner as the Committee may deem equitable (in its sole discretion), adjust any or all of the number and kind of shares subject to this Option, the exercise price with respect to shares of Stock covered by the Option and/or, if deemed appropriate, make provision for a cash payment to the person holding this Option; provided, however, that the number of shares subject to this Option always shall be a whole number.

     5. Termination of Employment.

          (a) Qualifying Termination. If the Participant’s employment terminates by reason of a Qualifying Termination on or after the first anniversary of the Grant Date, all of the Options granted hereunder shall become vested and the Participant may exercise the Options until the normal termination date specified in Section 3(a).

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          (b) Termination for any Other Reason. If the Participant’s employment terminates for any reason other than a Qualifying Termination on or after the first anniversary of the Grant Date, any Options not exercised on or prior to the date of termination (including, without limitation, any portion of the Options that are not then exercisable) shall be forfeited and canceled without further action by the Corporation or the Participant as of the date of such termination. For purposes of the Option, the term “Retirement” shall mean a termination of the Participant’s employment other than for Cause at or after the age at which retirement benefits can commence under the Employer’s retirement plan, or, in the absence of such a plan, on or after the age for commencement of pension benefits under local statute. Accordingly, all of the Options covered by the Award shall be forfeited and canceled without further action by the Corporation or the Participant as of the date a Participant is terminated for Cause, whether prior to, on, or after the attainment of such age.

          (c) Transfers between the Corporation and Subsidiaries; Leaves, Other Absences and Suspension. Transfer from the Corporation to a Subsidiary, from a Subsidiary to the Corporation, or from one Subsidiary to another shall not be considered a termination of employment. Any question regarding whether a Participant’s employment has terminated in connection with a leave of absence or other absence from active employment shall be determined by the Committee, in its sole discretion, taking into account the provisions of applicable law and the Corporation’s generally applicable employment policies and practices. The Committee also may suspend the operation of the termination of employment provisions of this Agreement for such period and upon such terms and conditions as it may deem necessary or appropriate to further the interests of the Corporation.

     6. Change in Control. Notwithstanding anything in Section 2 to the contrary, Section 9 of the Plan shall apply in the event of a Change in Control.

     7. Restrictive Covenants. As a condition to the receipt of the Option made hereby, the Participant agrees to be bound by the terms and conditions hereof and of the Plan, including the following restrictive covenants:

          (a) Non-Disclosure. The Participant shall not, without prior written authorization from the Corporation’s Chief Executive Officer, disclose to anyone outside the Corporation, or use (other than in the Corporation’s or any of the Subsidiaries’ business), any confidential information or material relating to the business of the Corporation or any of the Subsidiaries that is acquired by the Participant either during or after employment with the Corporation or any of the Subsidiaries.

          (b) Non-Solicitation. Unless the Participant has received prior written authorization from the Corporation’s Chief Executive Officer, the Participant shall not during his or her employment or service with the Corporation or any of the Subsidiaries and for a period of one (1) year following any termination of such employment or service relationship (the “Restricted Period”):

          (i) Directly or indirectly, employ, solicit, persuade, encourage or induce any individual employed by the Corporation or any of the Subsidiaries to become

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employed by or associated with any person or entity other than the Corporation or any of the Subsidiaries; or

          (ii) Directly or indirectly, solicit business on behalf of a Competitive Business from any Customer with whom the Participant has had, or employees reporting to the Participant have had, personal contact or dealings with on behalf of the Corporation or any of the Subsidiaries during the one (1) year period preceding the Restricted Period.

          “Customer” shall mean a person or entity to which the Corporation or any of the Subsidiaries is at the time providing services (which includes the provision of insurance or any other contractual obligation under any products of the Corporation or any of the Subsidiaries); for avoidance of doubt, it is understood and agreed that the term “Customer” includes any broker, agent, or other third party acting for or on behalf of such broker or agent.

          “Competitive Business” shall mean any person or entity (including any joint venture, partnership, firm, corporation or limited liability company) that engages, directly or indirectly, in the property and casualty insurance business, including, but not limited to, commercial insurance, personal insurance, specialty insurance, surety, excess and surplus lines and/or reinsurance, and/or any other business that is a significant business of, the Corporation and the Subsidiaries as of the date of the Participant’s termination of employment or service with the Corporation or any of the Subsidiaries; provided however, that a business set forth above shall not be considered a “Competitive Business” in the event that, as of the date of the Participant’s termination of employment or service with the Corporation or any of the Subsidiaries, such business is no longer a business of the Corporation or any of the Subsidiaries.

          (c) Inventions. A Participant shall disclose promptly and assign to the Corporation all right, title, and interest in any invention or idea, patentable or not, made or conceived by the Participant during employment by the Corporation or any of the Subsidiaries, relating in any manner to the actual or anticipated business, research or development work of the Corporation or any of the Subsidiaries and shall do anything reasonably necessary to enable the Corporation or any of the Subsidiaries to secure a patent, copyright or any other intellectual property rights where appropriate in the United States and in foreign countries.

          (d) Relief with Respect to Violations of Covenants. Failure to comply with the provisions of this Section 7 at any point before delivery of shares of Stock in respect of the Option shall cause the Option to be canceled without any payment therefor. In the event that all or any portion of the Option shall have been exercised within twelve (12) months of the date on which any breach by the Participant of any of the provisions of this Section 7 shall have first occurred, the Committee may require that the Participant repay (with interest or appreciation (if any), as applicable, determined up to the date payment is made), and the Participant shall promptly repay, to the Corporation the value of any cash or property (including the Fair Market Value of any Stock) conveyed to the Participant within such period in respect of the Option. Additionally, the Participant agrees that the Corporation shall be entitled to an injunction, restraining order or such other equitable relief restraining the Participant from committing any violation of the covenants or obligations contained in this Section 7. These rescission rights and injunctive remedies are cumulative and are in addition to any other rights and remedies the

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Corporation may have at law or in equity. The Participant acknowledges and agrees that the covenants and obligations in this Section 7 relate to special, unique and extraordinary matters and that a violation or threatened violation of any of the terms of such covenants or obligations will cause the Corporation and the Subsidiaries irreparable injury for which adequate remedies are not available at law.

          (e) Reformation. The Participant agrees that the provisions of this Section 7 are necessary and reasonable to protect the Corporation in the conduct of its business. If any restriction contained in this Section 7 shall be deemed to be invalid, illegal or unenforceable by reason of the extent, duration or geographical scope hereof, or otherwise, then the court making such determination shall have the right to reduce such extent, duration, geographical scope or other provisions hereof, and in its reduced form such restriction shall then be enforceable in the manner contemplated hereby.

     8. Notice. Any notice to be given hereunder to the Corporation, other than with respect to option exercises, shall be addressed to The Chubb Corporation, Attention Secretary, 15 Mountain View Road, P.O. Box 1615, Warren, New Jersey 07061-1615, and any notice given hereunder to the Participant shall be addressed to the Participant at the Participant’s address as shown on the records of the Corporation.

     9. No Right to Continued Employment. Neither the execution and delivery hereof nor the granting of the Award shall constitute or be evidence of any agreement or understanding, express or implied, on the part of the Corporation or any of the Subsidiaries to employ or continue the employment of the Participant for any period.

     10. Committee Discretion; Delegation. Notwithstanding anything contained in this Agreement to the contrary, the Committee, in its sole discretion and in accordance with the terms of the Plan, may take any action that is authorized under the terms of the Plan that is not contrary to the express terms hereof, including accelerating the vesting and exercisability of Options, at such times (including, without limitation, upon or in connection with the Participant’s termination of employment) and upon such terms and conditions as the Committee shall determine. Nothing in this Agreement shall limit or in any way restrict the power of the Committee, consistent with the terms of the Plan, to delegate any of the powers reserved to it hereunder to such person or persons as it shall designate from time to time.

     11. Withholding. Regardless of any action the Corporation and/or the Subsidiary employing the Participant (the “Employer”) take with respect to any or all income tax (including U.S. federal, state, and local tax and/or non-U.S. tax), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items legally due by the Participant is and remains the Participant’s responsibility and that the Corporation and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including the grant, vesting or exercise of the Option, the subsequent sale of any shares of Stock acquired upon exercise and the receipt of any dividends; and (ii) do not commit to structure the terms of the grant or any aspect of the Award to reduce or eliminate the Participant’s liability for Tax-Related Items.

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     Prior to the relevant taxable event, the Participant shall pay or make arrangements satisfactory to the Corporation and/or the Employer to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Corporation and/or the Employer to withhold all applicable Tax-Related Items legally payable by the Participant from any wages or other cash compensation paid to the Participant by the Corporation and/or the Employer. Alternatively, or in addition, if permissible under local law, the Participant authorizes the Corporation and/or the Employer, at their discretion and pursuant to such procedures as the Corporation may specify from time to time, to satisfy the obligations with respect to all Tax-Related Items legally payable by the Participant by one or a combination of the following: (i) withholding otherwise deliverable shares of Stock, provided that the Corporation only withholds the amount of shares of Stock necessary to satisfy the minimum withholding amount or such other amount as may be necessary to avoid adverse accounting treatment; (ii) arranging for the sale of shares of Stock otherwise deliverable to the Participant (on the Participant’s behalf and at the Participant’s direction pursuant to this authorization); or (iii) withholding from the proceeds of the sale of shares of Stock acquired upon exercise of the Option. If the obligation for Tax-Related Items is satisfied by withholding a number of shares of Stock as described herein, the Participant shall be deemed, for tax purposes only, to have been issued the full number of shares of Stock subject to the portion of the Option exercised, notwithstanding that a number of shares are held back solely for purposes of paying the Tax-Related Items due as a result of any aspect of the Award. The Participant shall pay to the Corporation and/or the Employer any amount of Tax-Related Items that the Corporation and/or the Employer may be required to withhold as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Corporation may refuse to deliver to the Participant any shares of Stock pursuant to the Award if the Participant fails to comply with his or her obligations in connection with the Tax-Related Items as described in this Section 11.

     12. [Acknowledgement of Nature of Plan and Option. In accepting the Option, the Participant acknowledges that:

     (a) the Plan is established voluntarily by the Corporation, it is discretionary in nature, and it may be modified, amended, suspended or terminated by the Corporation at any time, unless otherwise provided in the Plan and this Agreement;

     (b) the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of Options, or benefits in lieu of Options, even if Options have been granted repeatedly in the past;

     (c) all decisions with respect to future awards, if any, will be at the sole discretion of the Corporation;

     (d) the Participant’s participation in the Plan is voluntary;

     (e) the Participant’s participation in the Plan shall not interfere with the ability of the Employer to terminate the Participant’s employment or service relationship (if any) at any time;

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     (f) the Option is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Corporation or any Subsidiary and which is outside the scope of the Participant’s employment or service contract, if any;

     (g) the Option is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculation of any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Corporation or any Subsidiary;

     (h) the future value of the underlying shares of Stock is unknown and cannot be predicted with certainty;

     (i) if the underlying shares of Stock do not increase in value, the Option will have no value;

     (j) if the Participant exercises his or her Option and obtains shares of Stock, the value of such shares may increase or decrease in value, even below the exercise price;

     (k) in consideration of the Option, no claim or entitlement to compensation or damages shall arise from termination of the Option or from any diminution in value of the Option or shares of Stock acquired upon exercise of the Option resulting from termination of the Participant’s employment with the Corporation or any Subsidiary (for any reason whatsoever and whether or not in breach of local labor laws) and the Participant irrevocably releases the Corporation and any Subsidiary from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing the Agreement, the Participant shall be deemed to have waived his or her entitlement to pursue such claim;

     (l) in the event of termination of the Participant’s employment (whether or not in breach of local labor laws), the Participant’s right to receive an Option and vest in the Option under the Plan, if any, will terminate effective as of the date that the Participant is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law); furthermore, in the event of termination of employment (whether or not in breach of local labor laws), the Participant’s right to exercise the Option after termination of employment, if any, will be measured by the date of termination of the Participant’s active employment and will not be extended by any notice period mandated under local law; the Committee shall have the exclusive discretion to determine when the Participant is no longer actively employed for purposes of the Option;

     (m) the Corporation is not providing any tax, legal or financial advice, nor is the Corporation making any recommendations regarding the Participant’s participation in the Plan or the acquisition or sale of shares of Stock; and

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     (n) the Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.]

     13. [Data Privacy Notice and Consent. The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other Option grant materials by and among, as applicable, the Employer, the Corporation and its Subsidiaries for the exclusive purpose of implementing, administering and managing his or her participation in the Plan.

     The Participant understands that the Corporation and the Employer may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of Stock or directorships held in the Corporation, details of all Options or any other entitlement to shares of Stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor, for the exclusive purpose of implementing, administering and managing the Plan (“Data”).

     The Participant understands that Data will be transferred to any third parties assisting the Corporation with the implementation, administration and management of the Plan. The Participant understands that the recipients of Data may be located in the Participant’s country, in the United States or elsewhere, and that the recipients’ country may have different data privacy laws and protections than the Participant’s country. The Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. The Participant authorizes the Corporation and any other possible recipients which may assist the Corporation (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan. The Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. The Participant understands, however, that refusing or withdrawing his or her consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that the Participant may contact his or her local human resources representative.

     In addition to the above, if the Participant is a resident of Quebec, the Participant hereby authorizes the Corporation and the Corporation’s representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan. The Participant further authorizes the Corporation and any of its Subsidiaries and the administrator of the Plan to disclose and discuss the Plan

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with their advisors. The Participant further authorizes the Corporation and any Subsidiary to record such information and to keep such information in his or her employee file.]

     14. Electronic Delivery. The Corporation may, in its sole discretion, decide to deliver any documents related to the Option or future awards made under the Plan by electronic means or request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Corporation or a third party designated by the Corporation.

     15. [Language. If the Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control, unless otherwise prescribed by local law.]

     16. Governing Law. The Option and the legal relations between the parties shall be governed by and construed in accordance with the laws of the State of New Jersey (without reference to the principles of conflicts of law).

     17. Venue. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Option or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of New Jersey and agree that such litigation shall be conducted only in the courts of Somerset County, New Jersey, or the federal courts for the United States for the District of New Jersey, where the grant of this Option is made and/or to be performed.

     18. Signature in Counterpart. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signature thereto and hereto were upon the same instrument. This Agreement may be accepted by the Participant through an electronic acceptance.

     19. Binding Effect; Benefits. The Participant agrees to be bound by the terms and conditions hereof and of the Plan. This Agreement shall be binding upon and inure to the benefit of the Corporation and the Participant and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the Corporation or the Participant or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

     20. Amendment. This Agreement may not be altered, modified or amended except by a written instrument signed by the Corporation and the Participant.

     21. Sections and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

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     22. Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

     23. [Language Consent for Quebec Participants. The parties acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.]

[Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaries intentées, directement ou indirectement, relativement à ou suite à la présente convention.]

     IN WITNESS WHEREOF, the Corporation, by its duly authorized officer, and the Participant have executed this Agreement in duplicate as of the day and year first above written.

THE CHUBB CORPORATION
 

By:  

By:  

Participant 

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EX-10.33

Exhibit 10.33

AMENDMENT NO. 2
TO THE
THE CHUBB CORPORATION
ASSET MANAGERS INCENTIVE COMPENSATION PLAN (2005)

     Pursuant to the authority reserved in Section 8(k) of The Chubb Corporation Asset Managers Incentive Compensation Plan (2005) (the “Plan”), the Plan is hereby amended as follows:

     1. Effective January 1, 2009, the definition of “Qualified Termination” under Section 2 shall be revised to read as follows:

     “Qualified Termination” means termination of employment due to death, becoming “Disabled” (as defined in the Pension Plan), retirement on or after the Participant attains his or her “Early Retirement Age” or “Normal Retirement Date” (both as defined in the Pension Plan), or any other reason with the consent of the Committee.”

     2. Effective January 1, 2009, Section 8(h)(iii) shall be revised to read as follows:

          “(iii) Except as otherwise determined by the OCC in its sole discretion, a Participant who experiences a Qualified Termination on or after the first day of the seventh month (but on or before the last day) of a Long-Term Award Segment shall receive a prorated portion of his or her Long-Term Award, with the amount of the Long-Term Award determined based on performance through the date of the Qualified Termination. A Participant’s prorated Long-Term Award shall be determined by multiplying the amount of the Long-Term Award by a fraction, the numerator of which shall be the number of full calendar months from the start of the Long-Term Award Segment through the date of the Qualified Termination, and the denominator of which shall be 60.”

     3. All other provisions of the Plan shall remain unchanged and in full force and effect.

     IN WITNESS WHEREOF, The Chubb Corporation has caused this amendment to be duly executed on this            day of                      2009.

THE CHUBB CORPORATION
By: Name:	/s/ W. Andrew Macan W. Andrew Macan
Title:	Vice President, Corporate Counsel and Secretary

EX-12.1

Exhibit 12.1

THE CHUBB CORPORATION

COMPUTATION OF RATIO OF CONSOLIDATED EARNINGS TO FIXED CHARGES

	Years Ended December 31
	2009			2008			2007		2006		2005
	(in millions except for ratio amounts)
Income from continuing operations before provision for income taxes	$	2,962		$	2,407		$	3,937	$	3,525	$	2,447
Less:
Income (loss) from equity investees		(9	)		(14	)		390		266		186
Add:
Interest expensed		248			240			206		134		135
Capitalized interest amortized or expensed		2			8			12		32		15
Portion of rents representative of the interest factor		29			31			31		32		34
Distributions from equity investees		51			166			151		72		138
Income as adjusted	$	3,301		$	2,866		$	3,947	$	3,529	$	2,583
Fixed charges:
Interest expensed	$	248		$	240		$	206	$	134	$	135
Portion of rents representative of the interest factor		29			31			31		32		34
Fixed charges	$	277		$	271		$	237	$	166	$	169
Ratio of consolidated earnings to fixed charges		11.92			10.58			16.65		21.26		15.28

EX-21.1

Exhibit 21.1

THE CHUBB CORPORATION

SUBSIDIARIES OF THE REGISTRANT

Significant subsidiaries at December 31, 2009 of The Chubb Corporation, a New Jersey corporation, and their subsidiaries (indented), together with the percentages of ownership, are set forth below.

		Percentage
	Place of	of Securities
Company	Incorporation	Owned
Federal Insurance Company	Indiana		100	%
Vigilant Insurance Company	New York		100
Pacific Indemnity Company	Wisconsin		100
Northwestern Pacific Indemnity Company	Oregon		100
Texas Pacific Indemnity Company	Texas		100
Great Northern Insurance Company	Indiana		100
Chubb Insurance Company of New Jersey	New Jersey		100
Chubb Custom Insurance Company	Delaware		100
Chubb National Insurance Company	Indiana		100
Chubb Indemnity Insurance Company	New York		100
Executive Risk Indemnity Inc.	Delaware		100
Executive Risk Specialty Insurance Company	Connecticut		100
CC Canada Holdings Ltd.	Canada		100
Chubb Insurance Company of Canada	Canada		100
Chubb Insurance Investment Holdings Ltd.	United Kingdom		100
Chubb Insurance Company of Europe SE	United Kingdom		100
Chubb Insurance Company of Australia Limited	Australia		100
Chubb Argentina de Seguros, S.A.	Argentina		100
Chubb Insurance (China) Company Ltd.	China		100
Chubb Atlantic Indemnity Ltd.	Bermuda		100
DHC Corporation	Delaware		100
Chubb do Brasil Companhia de Seguros	Brazil		99
Bellemead Development Corporation	Delaware		100
Chubb Financial Solutions, Inc.	Delaware		100

Certain other subsidiaries of Chubb and its consolidated subsidiaries have been omitted since, in the aggregate, they would not constitute a significant subsidiary.

EX-23.1

Exhibit 23.1

THE CHUBB CORPORATION

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (Form S-3: No. 333-141561; Form S-8: No. 33-30020, No. 33-49230, No. 333-09273, No. 333-09275, No. 333-58157, No. 333-67347, No. 333-73073, No. 333-36530, No. 333-85462, No. 333-90140, No. 333-117120, No. 333-135011, No. 333-158841) of The Chubb Corporation and in the related Prospectuses of our reports dated February 26, 2010, with respect to the consolidated financial statements and schedules of The Chubb Corporation and the effectiveness of internal control over financial reporting of The Chubb Corporation, included in this Annual Report (Form 10-K) for the year ended December 31, 2009.

/s/  Ernst & Young LLP

New York, New York

February 26, 2010

EX-31.1

Exhibit 31.1

THE CHUBB CORPORATION

CERTIFICATION

I, John D. Finnegan, certify that:

1.  I have reviewed this annual report on Form 10-K of The Chubb Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 26, 2010

/s/  John D. Finnegan

John D. Finnegan

Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

THE CHUBB CORPORATION

CERTIFICATION

I, Richard G. Spiro, certify that:

1.  I have reviewed this annual report on Form 10-K of The Chubb Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 26, 2010

/s/  Richard G. Spiro

Richard G. Spiro

Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

THE CHUBB CORPORATION

CERTIFICATION OF PERIODIC REPORT

I, John D. Finnegan, Chairman, President and Chief Executive Officer of The Chubb Corporation (the “Corporation”), certify, pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the Annual Report on Form 10-K of the Corporation for the annual period ended December 31, 2009 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Dated: February 26, 2010

/s/  John D. Finnegan

John D. Finnegan

Chairman, President and Chief Executive Officer

EX-32.2

Exhibit 32.2

THE CHUBB CORPORATION

CERTIFICATION OF PERIODIC REPORT

I, Richard G. Spiro, Executive Vice President and Chief Financial Officer of The Chubb Corporation (the “Corporation”), certify, pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the Annual Report on Form 10-K of the Corporation for the annual period ended December 31, 2009 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Dated: February 26, 2010

/s/  Richard G. Spiro

Richard G. Spiro

Executive Vice President and Chief Financial Officer