EX-99.1 3 y91122exv99w1.htm EX-99.1: SUPPLEMENTARY INVESTOR INFORMATION REPORT EX-99.1: SUPPLEMENTARY INVESTOR INFORMATION REPORT
 

Exhibit 99.1

         
The
Chubb
Corporation
  Supplementary
Investor
Information
  September 30, 2003
         
         
         
     
This report is for informational purposes only. It should be read in conjunction with documents filed by The Chubb Corporation with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q   (CHUBB LOGO)


 

THE CHUBB CORPORATION
SUPPLEMENTARY INVESTOR INFORMATION
TABLE OF CONTENTS
SEPTEMBER 30, 2003

           
      Page
     
The Chubb Corporation:
       
 
Sources of Consolidated Net Income
    1  
 
Share Data
    2  
 
Consolidated Balance Sheet Highlights
    3  
Summary of Invested Assets:
       
 
Corporate
    4  
 
Property and Casualty
    4  
Property and Casualty Insurance Group:
       
 
Investment Income After Taxes
    5  
 
Statutory Policyholders’ Surplus
    5  
 
Combined Loss and Expense Ratios
    6  
 
Claims and Claim Expense Components
    6  
 
Change in Net Unpaid Claims
    7  
 
Underwriting Results — Year-to-Date
    8-11  
 
Underwriting Results — Quarterly
    12-15  
Definitions of Key Terms
    16  

 


 

THE CHUBB CORPORATION

SOURCES OF CONSOLIDATED NET INCOME

                                   
      PERIODS ENDED SEPTEMBER 30
     
      THIRD QUARTER   NINE MONTHS
     
 
      2003   2002   2003   2002
     
 
 
 
      (in millions)
Property and Casualty
                               
 
Net Premiums Written
  $ 2,845.5     $ 2,315.2     $ 8,137.5     $ 6,620.2  
 
 
   
     
     
     
 
 
Underwriting Income (Loss)(a)
    70.6       (646.2 )     242.0       (564.8 )
 
Investment Income, Net of Expenses
    269.6       233.3       776.7       691.3  
 
Other Charges
    (.9 )     (3.5 )     (22.6 )     (16.8 )
 
 
   
     
     
     
 
Property and Casualty Income (Loss)
    339.3       (416.4 )     996.1       109.7  
Chubb Financial Solutions Non-Insurance Business
    (38.8 )     (40.4 )     (30.6 )     (55.9 )
Corporate and Other
    (23.3 )     (19.7 )     (102.4 )     (55.4 )
 
 
   
     
     
     
 
Consolidated Operating Income (Loss) Before Income Tax
    277.2       (476.5 )     863.1       (1.6 )
Federal and Foreign Income Tax (Credit)
    56.7       (205.8 )     182.3       (118.8 )
 
 
   
     
     
     
 
CONSOLIDATED OPERATING INCOME (LOSS)
    220.5       (270.7 )     680.8       117.2  
Realized Investment Gains After Income Tax
    39.3       28.6       55.7       49.1  
 
 
   
     
     
     
 
CONSOLIDATED NET INCOME (LOSS)
  $ 259.8     $ (242.1 )   $ 736.5     $ 166.3  
 
 
   
     
     
     
 
PROPERTY AND CASUALTY INVESTMENT INCOME AFTER INCOME TAX
  $ 213.9     $ 190.1     $ 619.1     $ 566.5  
 
 
   
     
     
     
 

Effective January 1, 2003, the Corporation adopted the fair value method of accounting for stock-based employee compensation plans using the modified prospective method of transition. The change in accounting resulted in a decrease in operating income before income tax of $15.4 million ($10.4 million after-tax) for the third quarter of 2003 and $51.1 million ($35.7 million after-tax) for the nine months ended September 30, 2003.

(a)   The underwriting loss for the first nine months and third quarter of 2002 includes net losses of $625.0 million ($406.3 million after-tax) recognized in the third quarter related to asbestos and toxic waste claims.

Page 1 of 16


 

THE CHUBB CORPORATION

SHARE DATA

                                   
      PERIODS ENDED SEPTEMBER 30
     
      THIRD QUARTER   NINE MONTHS
     
 
      2003   2002   2003   2002
     
 
 
 
Diluted Earnings Per Share Data
                               
 
Operating Income (Loss)
  $ 1.16     $ (1.59 )   $ 3.82     $ .68  
 
Realized Investment Gains
    .21       .17       .31       .28  
 
 
   
     
     
     
 
 
Net Income (Loss)
  $ 1.37     $ (1.42 )   $ 4.13     $ .96  
 
 
   
     
     
     
 
 
Effect of Catastrophe Losses
  $ (.33 )   $ (.20 )   $ (.95 )   $ (.28 )
 
 
   
     
     
     
 
 
Effect of Asbestos and Toxic Waste Losses
  $     $ (2.38 )   $     $ (2.50 )
 
 
   
     
     
     
 
 
Effect of Chubb Financial Solutions Non-Insurance Business
  $ (.14 )   $ (.15 )   $ (.11 )   $ (.21 )
 
 
   
     
     
     
 
 
Effect of Expensing Stock Options
  $ (.05 )   $     $ (.20 )   $  
 
 
   
     
     
     
 
Average Common and Potentially Dilutive Shares Outstanding (in millions)
    189.4       170.6       178.4       173.3  

SHARE REPURCHASE ACTIVITY

                         
    PERIODS ENDED SEPTEMBER 30        
   
  FROM
    THIRD   NINE   FEBRUARY 1994
    QUARTER   MONTHS   TO
    2003   2003   SEPTEMBER 30, 2003
   
 
 
    (dollars in millions, except per share amounts)
Cost of Shares Repurchased
              $ 2,633.4  
Average Cost Per Share
              $ 64.71  
Shares Repurchased
                40,698,200  

In February 1994, the Board of Directors authorized the repurchase of up to 10,000,000 shares of common stock. Through March 1997, 6,851,600 shares were repurchased under the 1994 share repurchase authorization. In March 1997, the Board of Directors replaced the 1994 authorization with a new authorization to repurchase up to 17,500,000 shares of common stock. In July 1998, the Board of Directors authorized the repurchase of up to an additional 12,500,000 shares. In June 2001, the Board of Directors authorized the repurchase of up to an additional 16,000,000 shares; the 2001 authorization expired on June 30, 2003. As of September 30, 2003, 3,287,100 shares remained under the 1998 share repurchase authorization.

Page 2 of 16


 

THE CHUBB CORPORATION

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

                     
        Sept. 30   Dec. 31
        2003   2002
       
 
        (in millions)
Invested Assets (at carrying value)
               
 
Short Term Investments
  $ 2,689.4     $ 1,756.7  
 
Fixed Maturities
               
   
Tax Exempt
    11,140.7       9,877.8  
   
Taxable
    10,393.3       8,385.7  
 
Equity Securities
    1,482.7       992.2  
 
 
   
     
 
   
Total Invested Assets
  $ 25,706.1     $ 21,012.4  
 
 
   
     
 
Unrealized Appreciation of Fixed Maturities Carried at Amortized Cost
  $ 40.7     $ 55.8  
 
 
   
     
 
Capitalization
               
 
Long Term Debt
  $ 2,814.1     $ 1,959.1  
 
Shareholders’ Equity
    8,477.6       6,859.2  
 
 
   
     
 
   
Total Capitalization
  $ 11,291.7     $ 8,818.3  
 
 
   
     
 
DEBT AS A PERCENTAGE OF TOTAL CAPITALIZATION
    24.9 %     22.2 %
Actual Common Shares Outstanding
    187.7       171.2  
Book Value Per Common Share
  $ 45.17     $ 40.06  
Book Value Per Share, with Available-for-Sale Fixed Maturities at Amortized Cost
  $ 41.82     $ 36.61  

Page 3 of 16


 

THE CHUBB CORPORATION

SUMMARY OF INVESTED ASSETS

CORPORATE

                                                   
      Cost or   Market   Carrying
      Amortized Cost   Value   Value
     
 
 
      Sept. 30   Dec. 31   Sept. 30   Dec. 31   Sept. 30   Dec. 31
      2003   2002   2003   2002   2003   2002
     
 
 
 
 
 
      (in millions)
Short Term Investments
  $ 894.5     $ 106.4     $ 894.5     $ 106.4     $ 894.5     $ 106.4  
Taxable Fixed Maturities
    396.2       144.7       400.6       150.3       400.6       150.3  
Equity Securities
    8.5       71.0       8.4       71.3       8.4       71.3  
 
   
     
     
     
     
     
 
 
TOTAL
  $ 1,299.2     $ 322.1     $ 1,303.5     $ 328.0     $ 1,303.5     $ 328.0  
 
   
     
     
     
     
     
 

PROPERTY AND CASUALTY

                                                     
        Cost or   Market   Carrying
        Amortized Cost   Value   Value
       
 
 
        Sept. 30   Dec. 31   Sept. 30   Dec. 31   Sept. 30   Dec. 31
        2003   2002   2003   2002   2003   2002
       
 
 
 
 
 
        (in millions)
Short Term Investments
  $ 1,794.9     $ 1,650.3     $ 1,794.9     $ 1,650.3     $ 1,794.9     $ 1,650.3  
Fixed Maturities
                                               
 
Tax Exempt
    10,507.1       9,244.1       11,181.4       9,933.6       11,140.7       9,877.8  
 
Taxable
    9,665.8       7,967.8       9,992.7       8,235.4       9,992.7       8,235.4  
Common Stocks
    1,358.4       886.0       1,426.4       874.7       1,426.4       874.7  
Preferred Stocks
    40.7       41.3       47.9       46.2       47.9       46.2  
 
   
     
     
     
     
     
 
   
TOTAL
  $ 23,366.9     $ 19,789.5     $ 24,443.3     $ 20,740.2     $ 24,402.6     $ 20,684.4  
 
   
     
     
     
     
     
 

Page 4 of 16


 

THE CHUBB CORPORATION

PROPERTY AND CASUALTY

INVESTMENT INCOME AFTER TAXES

                                   
      PERIODS ENDED SEPTEMBER 30
     
      THIRD QUARTER   NINE MONTHS
     
 
      2003   2002   2003   2002
     
 
 
 
      (in millions)
Investment Income
                               
Dividends
  $ 9.0     $ 3.0     $ 19.9     $ 7.5  
Taxable Interest
    86.2       76.7       253.1       220.8  
Tax Exempt Interest
    121.5       115.6       357.4       349.8  
Investment Expenses
    (2.8 )     (5.2 )     (11.3 )     (11.6 )
 
   
     
     
     
 
 
TOTAL
  $ 213.9     $ 190.1     $ 619.1     $ 566.5  
 
   
     
     
     
 
 
                               
Amounts are shown net of applicable income taxes. 
                               
 
                               
Effective Tax Rate
    20.7 %     18.5 %     20.3 %     18.1 %
After Tax Annualized Yield
    3.71 %     4.31 %     3.83 %     4.41 %

After tax annualized yield is based on the average invested assets for the periods presented with fixed maturities at amortized cost and equity securities at market value.

STATUTORY POLICYHOLDERS’ SURPLUS

                 
    Sept. 30   Dec. 31
    2003   2002
   
 
    (in millions)
Estimated Statutory Policyholders’ Surplus
  $ 6,200     $ 4,512  
Rolling Year Statutory Net Premiums Written
    10,538       9,034  
Ratio of Statutory Net Premiums Written to Estimated Policyholders’ Surplus
    1.70:1       2.00:1  

Statutory Policyholders’ Surplus and Net Premiums Written include all domestic and foreign property and casualty subsidiaries.

Page 5 of 16


 

THE CHUBB CORPORATION

PROPERTY AND CASUALTY

UNDERWRITING RATIOS

                                 
    PERIODS ENDED SEPTEMBER 30
   
    THIRD QUARTER   NINE MONTHS
   
 
    2003   2002   2003   2002
   
 
 
 
Loss Ratio
    65.7 %     98.8 %     65.1 %     77.2 %
Expense Ratio
    30.9       31.2       30.7       31.5  
 
   
     
     
     
 
Combined Ratio
    96.6 %     130.0 %     95.8 %     108.7 %
 
   
     
     
     
 
Effect of Catastrophe Losses on Combined Ratio
    3.7 %     2.5 %     3.5 %     1.3 %

The 2002 underwriting ratios include the effect of losses of $625.0 million related to asbestos and toxic waste claims recognized in the third quarter. Excluding the effect of such losses, the losses to premiums earned ratio was 68.7% for the third quarter of 2002 and 66.5% for the nine months ended September 30, 2002 and the combined loss and expense ratio was 99.9% and 98.0%, respectively.

CLAIMS AND CLAIM EXPENSE COMPONENTS

                                 
    PERIODS ENDED SEPTEMBER 30
   
    THIRD QUARTER   NINE MONTHS
   
 
    2003   2002   2003   2002
   
 
 
 
        (in millions)
Paid Claims and Claim Expenses
  $ 1,337.4     $ 1,019.6     $ 3,708.9     $ 3,278.9  
Increase in Unpaid Claims and Claim Expenses
    373.9       1,032.4       1,141.1       1,234.1  
 
   
     
     
     
 
Total Claims and Claim Expenses
  $ 1,711.3     $ 2,052.0     $ 4,850.0     $ 4,513.0  
 
   
     
     
     
 

The increase in unpaid claims and claim expenses for the third quarter and the first nine months of 2002 includes $611.7 million and $617.5 million, respectively, related to asbestos and toxic waste claims.

Page 6 of 16


 

THE CHUBB CORPORATION

PROPERTY AND CASUALTY

CHANGE IN NET UNPAID CLAIMS
NINE MONTHS ENDED SEPTEMBER 30, 2003

                                             
                                        All Other
        Net Unpaid Claims   IBNR   Unpaid Claims
       
  Increase   Increase
        9/30/2003   12/31/02   Increase   (Decrease)   (Decrease)
       
 
 
 
 
                        (in millions)                
PERSONAL INSURANCE
                                       
Automobile
  $ 333.3     $ 306.7     $ 26.6     $ 8.8     $ 17.8  
Homeowners
    569.7       488.3       81.4       70.4       11.0  
Other
    294.5       271.3       23.2       5.2       18.0  
 
   
     
     
     
     
 
 
Total Personal
    1,197.5       1,066.3       131.2       84.4       46.8  
 
   
     
     
     
     
 
COMMERCIAL INSURANCE
                                       
Multiple Peril
    1,229.8       1,224.4       5.4       41.1       (35.7 )
Casualty
    3,649.4       3,526.0       123.4       (29.0 )     152.4  
Workers’ Compensation
    835.4       746.6       88.8       52.3       36.5  
Property and Marine
    440.1       371.2       68.9       64.7       4.2  
 
   
     
     
     
     
 
 
Total Commercial
    6,154.7       5,868.2       286.5       129.1       157.4  
 
   
     
     
     
     
 
SPECIALTY INSURANCE
                                       
Executive Protection
    3,811.0       3,335.3       475.7       246.5       229.2  
Financial Institutions
    1,664.3       1,580.5       83.8       220.6       (136.8 )
Other
    955.2       791.3       163.9       214.1       (50.2 )
 
   
     
     
     
     
 
 
Total Specialty
    6,430.5       5,707.1       723.4       681.2       42.2  
 
   
     
     
     
     
 
   
TOTAL
  $ 13,782.7     $ 12,641.6     $ 1,141.1     $ 894.7     $ 246.4  
 
   
     
     
     
     
 

Page 7 of 16


 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(MILLIONS OF DOLLARS)

                                                                   
      Personal                   Other   Total
      Automobile   Homeowners   Personal   Personal
     
 
 
 
      2003   2002   2003   2002   2003   2002   2003   2002
     
 
 
 
 
 
 
 
Net Premiums Written
  $ 443.6     $ 402.1     $ 1,114.2     $ 971.1     $ 391.4     $ 364.1     $ 1,949.2     $ 1,737.3  
Increase (Decrease) in Unearned Premiums
    28.4       26.0       93.6       115.9       23.2       28.5       145.2       170.4  
 
   
     
     
     
     
     
     
     
 
Net Premiums Earned
    415.2       376.1       1,020.6       855.2       368.2       335.6       1,804.0       1,566.9  
 
   
     
     
     
     
     
     
     
 
Net Losses Paid
    261.7       229.8       653.5       525.8       145.5       139.8       1,060.7       895.4  
Increase (Decrease) in Outstanding Losses
    26.6       27.3       81.4       72.0       23.2       10.2       131.2       109.5  
 
   
     
     
     
     
     
     
     
 
Net Losses Incurred
    288.3       257.1       734.9       597.8       168.7       150.0       1,191.9       1,004.9  
 
   
     
     
     
     
     
     
     
 
Expenses Incurred
    130.5       121.0       385.2       347.2       125.0       119.4       640.7       587.6  
Dividends Incurred
    0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0  
 
   
     
     
     
     
     
     
     
 
Underwriting Income (Loss)
  $ (3.6 )   $ (2.0 )   $ (99.5 )   $ (89.8 )   $ 74.5     $ 66.2     $ (28.6 )   $ (25.6 )
 
   
     
     
     
     
     
     
     
 
Ratios After Dividends to Policyholders:
                                                               
Loss
    69.5 %     68.4 %     72.0 %     69.9 %     45.8 %     44.7 %     66.1 %     64.2 %
Expense
    29.4       30.1       34.6       35.8       32.0       32.8       32.8       33.8  
 
   
     
     
     
     
     
     
     
 
Combined
    98.9 %     98.5 %     106.6 %     105.7 %     77.8 %     77.5 %     98.9 %     98.0 %
 
   
     
     
     
     
     
     
     
 
Premiums Written as a % of Total
    5.5 %     6.1 %     13.7 %     14.7 %     4.8 %     5.5 %     24.0 %     26.3 %

Page 8 of 16


 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(MILLIONS OF DOLLARS)

                                                                                 
    Commercial   Commercial   Workers'   Property   Total
    Multiple Peril   Casualty   Compensation   and Marine   Commercial
   
 
 
 
 
    2003   2002   2003   2002   2003   2002   2003   2002   2003   2002
   
 
 
 
 
 
 
 
 
 
Net Premiums Written
  $ 809.4     $ 687.5     $ 1,010.0     $ 834.7     $ 475.9     $ 350.3     $ 766.1     $ 652.7     $ 3,061.4     $ 2,525.2  
Increase (Decrease) in Unearned Premiums
    53.3       69.6       109.1       134.8       74.1       48.5       38.7       155.7       275.2       408.6  
 
   
     
     
     
     
     
     
     
     
     
 
Net Premiums Earned
    756.1       617.9       900.9       699.9       401.8       301.8       727.4       497.0       2,786.2       2,116.6  
 
   
     
     
     
     
     
     
     
     
     
 
Net Losses Paid
    401.6       426.0       414.8       488.3       178.1       150.5       331.6       265.3       1,326.1       1,330.1  
Increase (Decrease) in Outstanding Losses
    5.4       (36.4 )     123.4       601.9       88.8       37.4       68.9       (1.7 )     286.5       601.2  
 
   
     
     
     
     
     
     
     
     
     
 
Net Losses Incurred
    407.0       389.6       538.2       1,090.2       266.9       187.9       400.5       263.6       1,612.6       1,931.3  
 
   
     
     
     
     
     
     
     
     
     
 
Expenses Incurred
    295.5       264.2       292.3       251.0       112.4       88.4       262.2       216.7       962.4       820.3  
Dividends Incurred
    0.0       0.0       0.0       0.0       9.7       17.3       0.0       0.0       9.7       17.3  
 
   
     
     
     
     
     
     
     
     
     
 
Underwriting Income (Loss)
  $ 53.6     $ (35.9 )   $ 70.4     $ (641.3 )   $ 12.8     $ 8.2     $ 64.7     $ 16.7     $ 201.5     $ (652.3 )
 
   
     
     
     
     
     
     
     
     
     
 
Ratios After Dividends to Policyholders:
                                                                               
Loss
    53.8 %     63.1 %     59.8 %     155.8 %     68.1 %     66.1 %     55.1 %     53.0 %     58.1 %     92.0 %
Expense
    36.5       38.4       28.9       30.0       24.1       26.5       34.2       33.2       31.5       32.7  
 
   
     
     
     
     
     
     
     
     
     
 
Combined
    90.3 %     101.5 %     88.7 %     185.8 %     92.2 %     92.6 %     89.3 %     86.2 %     89.6 %     124.7 %
 
   
     
     
     
     
     
     
     
     
     
 
Premiums Written as a % of Total
    9.9 %     10.4 %     12.4 %     12.6 %     5.9 %     5.3 %     9.4 %     9.8 %     37.6 %     38.1 %

The Property and Casualty underwriting results for 2002 include the effect of losses of $625.0 million related to asbestos and toxic waste claims recognized in the third quarter. For the nine months ended September 30, 2002, excluding the effect of such losses, the combined loss and expense ratio was 96.5% for Casualty and 94.9% for Total Commercial.

Page 9 of 16


 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(MILLIONS OF DOLLARS)

                                                                                 
    Executive   Financial   Other   Total   Worldwide
    Protection   Institutions   Specialty   Specialty   Total
   
 
 
 
 
    2003   2002   2003   2002   2003   2002   2003   2002   2003   2002
   
 
 
 
 
 
 
 
 
 
Net Premiums Written
  $ 1,526.0     $ 1,214.3     $ 603.4     $ 508.3     $ 997.5     $ 635.1     $ 3,126.9     $ 2,357.7     $ 8,137.5     $ 6,620.2  
Increase (Decrease) in Unearned Premiums
    89.4       52.2       25.5       38.3       135.6       81.9       250.5       172.4       670.9       751.4  
 
   
     
     
     
     
     
     
     
     
     
 
Net Premiums Earned
    1,436.6       1,162.1       577.9       470.0       861.9       553.2       2,876.4       2,185.3       7,466.6       5,868.8  
 
   
     
     
     
     
     
     
     
     
     
 
Net Losses Paid
    658.8       625.7       397.6       228.3       265.7       199.4       1,322.1       1,053.4       3,708.9       3,278.9  
Increase (Decrease) in Outstanding Losses
    475.7       291.0       83.8       120.3       163.9       112.1       723.4       523.4       1,141.1       1,234.1  
 
   
     
     
     
     
     
     
     
     
     
 
Net Losses Incurred
    1,134.5       916.7       481.4       348.6       429.6       311.5       2,045.5       1,576.8       4,850.0       4,513.0  
 
   
     
     
     
     
     
     
     
     
     
 
Expenses Incurred
    381.3       326.5       163.7       139.5       342.2       201.4       887.2       667.4       2,490.3       2,075.3  
Dividends Incurred
    0.0       0.0       5.6       8.0       2.7       1.3       8.3       9.3       18.0       26.6  
 
   
     
     
     
     
     
     
     
     
     
 
Underwriting Income (Loss)
  $ (79.2 )   $ (81.1 )   $ (72.8 )   $ (26.1 )   $ 87.4     $ 39.0     $ (64.6 )   $ (68.2 )     108.3       (746.1 )
 
   
     
     
     
     
     
     
     
     
     
 
Increase in Deferred Acquisition Costs
                                                                    133.7       181.3  
 
                                                                   
     
 
Adjusted Underwriting Income (Loss)
                                                                  $ 242.0     $ (564.8 )
 
                                                                   
     
 
Ratios After Dividends to Policyholders:
                                                                               
Loss
    79.0 %     78.9 %     84.1 %     75.4 %     50.0 %     56.4 %     71.3 %     72.5 %     65.1 %     77.2 %
Expense
    25.0       26.9       27.4       27.9       34.4       31.8       28.5       28.4       30.7       31.5  
 
   
     
     
     
     
     
     
     
     
     
 
Combined
    104.0 %     105.8 %     111.5 %     103.3 %     84.4 %     88.2 %     99.8 %     100.9 %     95.8 %     108.7 %
 
   
     
     
     
     
     
     
     
     
     
 
Premiums Written as a % of Total
    18.7 %     18.3 %     7.4 %     7.7 %     12.3 %     9.6 %     38.4 %     35.6 %     100.0 %     100.0 %

The Property and Casualty underwriting results for 2002 include the effect of losses of $625.0 million related to asbestos and toxic waste claims recognized in the third quarter. For the nine months ended September 30, 2002, excluding the effect of such losses, the combined loss and expense ratio was 98.0% for Worldwide Total.

Page 10 of 16


 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(MILLIONS OF DOLLARS)

                                                 
                                    Worldwide
    United States   Foreign   Total
   
 
 
    2003   2002   2003   2002   2003   2002
   
 
 
 
 
 
Net Premiums Written
  $ 6,735.2     $ 5,504.7     $ 1,402.3     $ 1,115.5     $ 8,137.5     $ 6,620.2  
Increase (Decrease) in Unearned Premiums
    603.6       675.7       67.3       75.7       670.9       751.4  
 
   
     
     
     
     
     
 
Net Premiums Earned
    6,131.6       4,829.0       1,335.0       1,039.8       7,466.6       5,868.8  
 
   
     
     
     
     
     
 
Net Losses Paid
    3,350.1       2,875.6       358.8       403.3       3,708.9       3,278.9  
Increase (Decrease) in Outstanding Losses
    748.6       955.7       392.5       278.4       1,141.1       1,234.1  
 
   
     
     
     
     
     
 
Net Losses Incurred
    4,098.7       3,831.3       751.3       681.7       4,850.0       4,513.0  
 
   
     
     
     
     
     
 
Expenses Incurred
    1,995.0       1,649.0       495.3       426.3       2,490.3       2,075.3  
Dividends Incurred
    18.0       26.6       0.0       0.0       18.0       26.6  
 
   
     
     
     
     
     
 
Underwriting Income (Loss)
  $ 19.9     $ (677.9 )   $ 88.4     $ (68.2 )     108.3       (746.1 )
 
   
     
     
     
     
     
 
Increase in Deferred Acquisition Costs
                                    133.7       181.3  
 
                                   
     
 
Adjusted Underwriting Income (Loss)
                                  $ 242.0     $ (564.8 )
 
                                   
     
 
Ratios After Dividends to Policyholders:
                                               
Loss
    67.0 %     79.8 %     56.3 %     65.6 %     65.1 %     77.2 %
Expense
    29.7       30.1       35.3       38.2       30.7       31.5  
 
   
     
     
     
     
     
 
Combined
    96.7 %     109.9 %     91.6 %     103.8 %     95.8 %     108.7 %
 
   
     
     
     
     
     
 
Premiums Written as a % of Total
    82.8 %     83.2 %     17.2 %     16.8 %     100.0 %     100.0 %

The Property and Casualty underwriting results for 2002 include the effect of losses of $625.0 million related to asbestos and toxic waste claims recognized in the third quarter. For the nine months ended September 30, 2002, excluding the effect of such losses, the combined loss and expense ratio was 96.9% for United States Total and 98.0% for Worldwide Total.

Page 11 of 16


 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTER ENDED SEPTEMBER 30, 2003 AND 2002
(MILLIONS OF DOLLARS)

                                                                   
      Personal                   Other   Total
      Automobile   Homeowners   Personal   Personal
     
 
 
 
      2003   2002   2003   2002   2003   2002   2003   2002
     
 
 
 
 
 
 
 
Net Premiums Written
  $ 154.3     $ 144.0     $ 402.9     $ 353.4     $ 132.1     $ 123.3     $ 689.3     $ 620.7  
Increase (Decrease) in Unearned Premiums
    10.7       12.2       50.8       53.5       7.7       8.9       69.2       74.6  
 
   
     
     
     
     
     
     
     
 
Net Premiums Earned
    143.6       131.8       352.1       299.9       124.4       114.4       620.1       546.1  
 
   
     
     
     
     
     
     
     
 
Net Losses Paid
    88.7       76.7       219.1       185.5       56.3       53.8       364.1       316.0  
Increase (Decrease) in Outstanding Losses
    8.9       9.9       49.2       35.2       0.4       (2.4 )     58.5       42.7  
 
   
     
     
     
     
     
     
     
 
Net Losses Incurred
    97.6       86.6       268.3       220.7       56.7       51.4       422.6       358.7  
 
   
     
     
     
     
     
     
     
 
Expenses Incurred
    43.8       41.5       131.1       124.4       43.8       41.1       218.7       207.0  
Dividends Incurred
    0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0  
 
   
     
     
     
     
     
     
     
 
Underwriting Income (Loss)
  $ 2.2     $ 3.7     $ (47.3 )   $ (45.2 )   $ 23.9     $ 21.9     $ (21.2 )   $ (19.6 )
 
   
     
     
     
     
     
     
     
 
Ratios After Dividends to Policyholders:
                                                               
Loss
    68.0 %     65.7 %     76.2 %     73.6 %     45.6 %     44.9 %     68.2 %     65.7 %
Expense
    28.4       28.8       32.5       35.2       33.1       33.4       31.7       33.3  
 
   
     
     
     
     
     
     
     
 
Combined
    96.4 %     94.5 %     108.7 %     108.8 %     78.7 %     78.3 %     99.9 %     99.0 %
 
   
     
     
     
     
     
     
     
 
Premiums Written as a % of Total
    5.4 %     6.2 %     14.2 %     15.3 %     4.6 %     5.3 %     24.2 %     26.8 %

Page 12 of 16


 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTER ENDED SEPTEMBER 30, 2003 AND 2002
(MILLIONS OF DOLLARS)

                                                                                 
    Commercial   Commercial   Workers'   Property   Total
    Multiple Peril   Casualty   Compensation   and Marine   Commercial
   
 
 
 
 
    2003   2002   2003   2002   2003   2002   2003   2002   2003   2002
   
 
 
 
 
 
 
 
 
 
Net Premiums Written
  $ 276.6     $ 235.1     $ 331.4     $ 275.9     $ 158.4     $ 116.4     $ 253.6     $ 238.4     $ 1,020.0     $ 865.8  
Increase (Decrease) in Unearned Premiums
    4.4       17.0       10.1       20.4       13.0       3.6       7.1       48.5       34.6       89.5  
 
   
     
     
     
     
     
     
     
     
     
 
Net Premiums Earned
    272.2       218.1       321.3       255.5       145.4       112.8       246.5       189.9       985.4       776.3  
 
   
     
     
     
     
     
     
     
     
     
 
Net Losses Paid
    152.8       136.4       142.7       126.5       58.5       48.3       117.0       74.4       471.0       385.6  
Increase (Decrease) in
Outstanding Losses
    2.2       2.7       54.6       647.2       42.8       22.3       11.1       42.4       110.7       714.6  
 
   
     
     
     
     
     
     
     
     
     
 
Net Losses Incurred
    155.0       139.1       197.3       773.7       101.3       70.6       128.1       116.8       581.7       1,100.2  
 
   
     
     
     
     
     
     
     
     
     
 
Expenses Incurred
    99.0       92.3       97.4       83.5       35.6       27.8       87.2       76.6       319.2       280.2  
Dividends Incurred
    (0.1 )     0.0       0.0       0.0       3.0       6.6       0.0       0.0       2.9       6.6  
 
   
     
     
     
     
     
     
     
     
     
 
Underwriting Income (Loss)
  $ 18.3     $ (13.3 )   $ 26.6     $ (601.7 )   $ 5.5     $ 7.8     $ 31.2     $ (3.5 )   $ 81.6     $ (610.7 )
 
   
     
     
     
     
     
     
     
     
     
 
Ratios After Dividends to Policyholders:
                                                                               
Loss
    56.9 %     63.8 %     61.4 %     302.8 %     71.2 %     66.5 %     52.0 %     61.5 %     59.2 %     143.0 %
Expense
    35.8       39.2       29.4       30.3       22.9       25.3       34.4       32.1       31.4       32.6  
 
   
     
     
     
     
     
     
     
     
     
 
Combined
    92.7 %     103.0 %     90.8 %     333.1 %     94.1 %     91.8 %     86.4 %     93.6 %     90.6 %     175.6  
 
   
     
     
     
     
     
     
     
     
     
 
Premiums Written as a % of
Total
    9.7 %     10.2 %     11.6 %     11.9 %     5.6 %     5.0 %     8.9 %     10.3 %     35.8 %     37.4 %

The Property and Casualty underwriting results for 2002 include the effect of losses of $625.0 million related to asbestos and toxic waste claims recognized in the third quarter. For the third quarter of 2002, excluding the effect of such losses, the combined loss and expense ratio was 88.5% for Casualty and 94.4% for Total Commercial.

Page 13 of 16


 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTER ENDED SEPTEMBER 30, 2003 AND 2002
(MILLIONS OF DOLLARS)

                                                                                 
    Executive   Financial   Other   Total   Worldwide
    Protection   Institutions   Specialty   Specialty   Total
   
 
 
 
 
    2003   2002   2003   2002   2003   2002   2003   2002   2003   2002
   
 
 
 
 
 
 
 
 
 
Net Premiums Written
  $ 525.0     $ 442.8     $ 182.8     $ 168.2     $ 428.4     $ 217.7     $ 1,136.2     $ 828.7     $ 2,845.5     $ 2,315.2  
Increase (Decrease) in Unearned Premiums
    35.8       33.0       (6.1 )     4.4       103.8       28.2       133.5       65.6       237.3       229.7  
 
   
     
     
     
     
     
     
     
     
     
 
Net Premiums Earned
    489.2       409.8       188.9       163.8       324.6       189.5       1,002.7       763.1       2,608.2       2,085.5  
 
   
     
     
     
     
     
     
     
     
     
 
Net Losses Paid
    309.0       191.3       141.7       59.7       51.6       67.0       502.3       318.0       1,337.4       1,019.6  
Increase (Decrease) in Outstanding Losses
    75.7       161.4       10.6       81.3       118.4       32.4       204.7       275.1       373.9       1,032.4  
 
   
     
     
     
     
     
     
     
     
     
 
Net Losses Incurred
    384.7       352.7       152.3       141.0       170.0       99.4       707.0       593.1       1,711.3       2,052.0  
 
   
     
     
     
     
     
     
     
     
     
 
Expenses Incurred
    134.2       116.3       54.4       47.5       150.2       68.6       338.8       232.4       876.7       719.6  
Dividends Incurred
    0.0       0.0       1.7       1.9       1.4       0.5       3.1       2.4       6.0       9.0  
 
   
     
     
     
     
     
     
     
     
     
 
Underwriting Income (Loss)
  $ (29.7 )   $ (59.2 )   $ (19.5 )   $ (26.6 )   $ 3.0     $ 21.0     $ (46.2 )   $ (64.8 )     14.2       (695.1 )
 
   
     
     
     
     
     
     
     
                 
Increase in Deferred Acquisition Costs
                                                                    56.4       48.9  
 
                                                                   
     
 
Adjusted Underwriting Income (Loss)
                                                                  $ 70.6     $ (646.2 )
 
                                                                   
     
 
Ratios After Dividends to Policyholders:
                                                                               
Loss
    78.6 %     86.1 %     81.4 %     87.1 %     52.6 %     52.6 %     70.7 %     78.0 %     65.7 %     98.8 %
Expense
    25.6       26.2       30.0       28.6       35.2       31.6       29.9       28.1       30.9       31.2  
 
   
     
     
     
     
     
     
     
     
     
 
Combined
    104.2 %     112.3 %     111.4 %     115.7 %     87.8 %     84.2 %     100.6 %     106.1 %     96.6 %     130.0 %
 
   
     
     
     
     
     
     
     
     
     
 
Premiums Written as a % of Total
    18.5 %     19.1 %     6.4 %     7.3 %     15.1 %     9.4 %     40.0 %     35.8 %     100.0 %     100.0 %

The Property and Casualty underwriting results for 2002 include the effect of losses of $625.0 million related to asbestos and toxic waste claims recognized in the third quarter. For the third quarter of 2002, excluding the effect of such losses, the combined loss and expense ratio was 99.9% for Worldwide Total.

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THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTER ENDED SEPTEMBER 30, 2003 AND 2002
(MILLIONS OF DOLLARS)

                                                 
                                    Worldwide
    United States   Foreign   Total
   
 
 
    2003   2002   2003   2002   2003   2002
   
 
 
 
 
 
Net Premiums Written
  $ 2,415.4     $ 1,962.2     $ 430.1     $ 353.0     $ 2,845.5     $ 2,315.2  
Increase (Decrease) in Unearned Premiums
    279.7       249.2       (42.4 )     (19.5 )     237.3       229.7  
 
   
     
     
     
     
     
 
Net Premiums Earned
    2,135.7       1,713.0       472.5       372.5       2,608.2       2,085.5  
 
   
     
     
     
     
     
 
Net Losses Paid
    1,141.7       892.6       195.7       127.0       1,337.4       1,019.6  
Increase (Decrease) in Outstanding Losses
    322.7       859.6       51.2       172.8       373.9       1,032.4  
 
   
     
     
     
     
     
 
Net Losses Incurred
    1,464.4       1,752.2       246.9       299.8       1,711.3       2,052.0  
 
   
     
     
     
     
     
 
Expenses Incurred
    719.2       584.8       157.5       134.8       876.7       719.6  
Dividends Incurred
    6.0       9.0       0.0       0.0       6.0       9.0  
 
   
     
     
     
     
     
 
Underwriting Income (Loss)
  $ (53.9 )   $ (633.0 )   $ 68.1     $ (62.1 )     14.2       (695.1 )
 
   
     
     
     
                 
Increase in Deferred Acquisition Costs
                                    56.4       48.9  
 
                                   
     
 
Adjusted Underwriting Income (Loss)
                                  $ 70.6     $ (646.2 )
 
                                   
     
 
Ratios After Dividends to Policyholders:
                                               
Loss
    68.8 %     102.8 %     52.3 %     80.5 %     65.7 %     98.8 %
Expense
    29.8       29.9       36.6       38.2       30.9       31.2  
 
   
     
     
     
     
     
 
Combined
    98.6 %     132.7 %     88.9 %     118.7 %     96.6 %     130.0 %
 
   
     
     
     
     
     
 
Premiums Written as a % of Total
    84.9 %     84.8 %     15.1 %     15.2 %     100.0 %     100.0 %

The Property and Casualty underwriting results for 2002 include the effect of losses of $625.0 million related to asbestos and toxic waste claims recognized in the third quarter. For the third quarter of 2002, excluding the effect of such losses, the combined loss and expense ratio was 96.1% for United States Total and 99.9% for Worldwide Total.

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THE CHUBB CORPORATION

Definitions of Key Terms

Operating Income

Operating income, a non-GAAP financial measure, is net income excluding after-tax realized investment gains and losses. Management uses operating income, among other measures, to evaluate its performance because the realization of investment gains and losses in any given period is largely discretionary as to timing and can fluctuate significantly, which could distort the analysis of trends.

Property and Casualty Investment Income After Income Tax

Management uses property and casualty investment income after income tax, a non-GAAP financial measure, to evaluate its investment performance because it reflects the impact of any change in the proportion of the investment portfolio invested in tax-exempt securities and is therefore more meaningful for analysis purposes than investment income before income taxes.

Book Value per Common Share with Available-for-Sale Fixed Maturities at Amortized Cost

Book value per share represents the portion of consolidated shareholders’ equity attributable to one share of common stock outstanding as of the balance sheet date. Consolidated shareholders’ equity includes, as part of accumulated other comprehensive income, the after-tax appreciation or depreciation on the Corporation’s available-for-sale fixed maturities carried at market value. The appreciation or depreciation on available-for-sale fixed maturities is subject to fluctuation due to changes in interest rates and therefore could distort the analysis of trends. Management believes that book value per common share with available-for-sale fixed maturities at amortized cost, a non-GAAP financial measure, is an important measure of the underlying equity attributable to one share of common stock.

Combined Ratio or Combined Loss and Expense Ratio

The combined loss and expense ratio, expressed as a percentage, is the key measure of underwriting profitability. The Corporation evaluates the performance of its insurance businesses by using the combined loss and expense ratio calculated in accordance with statutory accounting principles applicable to property and casualty insurance companies. It is the sum of the ratio of losses 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.

Statutory accounting principles 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. To convert underwriting expenses to a GAAP basis, policy acquisition expenses are deferred and recognized over the period in which the related premiums are earned.

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