-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q1wckrAmH6L3SQRcQEADDIZ1ekd5xCaR62sXR7mDYOF+I1DZNtr9CAfJkLjbLUr2 GkUQqbuQBeNhTX1ShfjZYw== 0000950123-06-005030.txt : 20060424 0000950123-06-005030.hdr.sgml : 20060424 20060424162140 ACCESSION NUMBER: 0000950123-06-005030 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20060424 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060424 DATE AS OF CHANGE: 20060424 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHUBB CORP CENTRAL INDEX KEY: 0000020171 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 132595722 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08661 FILM NUMBER: 06775381 BUSINESS ADDRESS: STREET 1: 15 MOUNTAIN VIEW RD P O BOX 1615 CITY: WARREN STATE: NJ ZIP: 07061 BUSINESS PHONE: 9089032000 8-K 1 y20109e8vk.htm 8-K 8-K
Table of Contents

 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 
     
Date of Report (Date of earliest event reported)
  April 24, 2006
 
 
 
THE CHUBB CORPORATION
 
(Exact name of registrant as specified in its charter)
         
New Jersey   1-8661   13-2595722
 
(State or other jurisdiction of   (Commission   (IRS Employer
incorporation)   File Number)   Identification No.)
     
15 Mountain View Road, P.O. Box 1615, Warren, New Jersey
  07061-1615
 
(Address of principal executive offices)
  (Zip Code)
     
Registrant’s telephone number, including area code
  (908) 903-2000
 
   
Not Applicable
 
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 


 

 

TABLE OF CONTENTS
 
Press release dated April 24, 2006 (furnished pursuant to Item 2.02 of Form 8-K)
Supplementary Investor Information Report (furnished pursuant to Item 2.02 of Form 8-K)
 EX-99.1: PRESS RELEASE
 EX-99.2: SUPPLEMENTARY INVESTOR INFORMATION REPORT


Table of Contents

 

Item 2.02 Results of Operations and Financial Condition.
The following information, including the text of the exhibits attached hereto, is furnished pursuant to this Item 2.02 of Form 8-K. On April 24, 2006, The Chubb Corporation (Chubb) issued a press release announcing its financial results for the quarter ended March 31, 2006. On April 24, 2006, Chubb also posted on its web site at www.chubb.com the Supplementary Investor Information Report (SIIR) relating to its 2006 first quarter results. Copies of the press release and the SIIR are attached to this Form 8-K as Exhibits 99.1 and 99.2, respectively. In its press release, the SIIR and the conference call to discuss its 2006 first quarter results, scheduled to be webcast at 5:00 P.M. on April 24, 2006, Chubb presents, and will present, its results of operations in the manner that it believes is most meaningful to investors, which includes certain measures that are not based on accounting principles generally accepted in the United States, as more fully described in the press release and the SIIR furnished as Exhibits 99.1 and 99.2, respectively, to this Form 8-K and incorporated by reference into this Item 2.02 as if fully set forth herein.
Item 9.01 Financial Statements and Exhibits.
     (c) Exhibits.
     
               99.1
  Press release dated April 24, 2006 (furnished pursuant to Item 2.02 of Form 8-K)
 
   
               99.2
  Supplementary Investor Information Report (furnished pursuant to Item 2.02 of Form 8-K)


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SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  THE CHUBB CORPORATION
 
 
Date: April 24, 2006  By:   /s/ Henry B. Schram    
    Name:   Henry B. Schram   
    Title:   Senior Vice President and
Chief Accounting Officer 
 


Table of Contents

 
         

EXHIBIT INDEX TO CURRENT REPORT ON FORM 8-K
DATED APRIL 24, 2006
     
Exhibit No.   Description
99.1
  Press release dated April 24, 2006 (furnished pursuant to Item 2.02 of Form 8-K)
 
   
99.2
  Supplementary Investor Information Report (furnished pursuant to Item 2.02 of Form 8-K)
EX-99.1 2 y20109exv99w1.htm EX-99.1: PRESS RELEASE EX-99.1:
 

 

Exhibit 99.1
     
(CHUBB LOGO)
  News from The Chubb Corporation
     
 
  The Chubb Corporation
 
  15 Mountain View Road P.O. Box 1615
 
  Warren, New Jersey 07061-1615
 
  Telephone: 908-903-2000
FOR IMMEDIATE RELEASE    
Chubb Reports First Quarter Net Income per Share of $1.58
After 2-for-1 Stock Split;
Operating Income per Share Increases 28% to a Record $1.42;
Combined Ratio Improves to 82.9% from 89.4%
     WARREN, New Jersey, April 24, 2006 — The Chubb Corporation [NYSE: CB] today reported that net income in the first quarter of 2006 was $672 million, or $1.58 per share, compared to $470 million, or $1.18 per share, in the first quarter of 2005.
     Operating income, which the company defines as net income excluding after-tax realized investment gains and losses, increased to $603 million from $441 million in the first quarter of 2005. Operating income per share increased 28% to a record $1.42 from $1.11.
     The per-share amounts have been adjusted to reflect Chubb’s two-for-one stock split, which was distributed in the form of a stock dividend on April 18, 2006 to shareholders of record on March 31, 2006.
     The first quarter combined loss and expense ratio improved to 82.9% in 2006 from 89.4% in 2005. “This was by far the best combined ratio and most profitable quarter in Chubb’s history,” said John D. Finnegan, Chairman, President and Chief Executive Officer, “as all three of our insurance businesses made substantial contributions to the bottom line.”
     Catastrophes had virtually no impact on the combined ratio in the first quarter of 2006. Catastrophe losses of $21 million were offset by a $20 million reduction in reinsurance reinstatement premium costs related to Hurricane Katrina. In the first quarter of 2005, catastrophe losses were $20 million and accounted for 0.6 points of the combined ratio. The expense ratio for the first quarter was 29.1% in 2006 and 28.8% in 2005.
     Net written premiums for the first quarter of 2006 declined 4% to $2.9 billion. Premiums for the insurance business declined 1%. Premiums for the Reinsurance Assumed business declined 46%, reflecting the impact of the Chubb Re — Harbor Point transaction completed on December 15, 2005.


 

2

     Property and casualty investment income after taxes for the first quarter increased 11% to $279 million in 2006 from $252 million in 2005.
     During the first quarter of 2006, Chubb repurchased 5,225,562 shares (on a post-split basis) of its common stock at a total cost of approximately $250 million.
     “Chubb’s spectacular first-quarter results obviously put us on the path to achieving or exceeding our January 31, 2006 operating income per share guidance of $4.30 to $4.50 for the year on a post-split basis,” said Mr. Finnegan. “However, we do not believe it is appropriate to revisit our guidance after only one quarter.” Guidance and related assumptions are subject to the risks outlined in the company’s forward-looking information safe-harbor statement below.
First Quarter Operations Review
     Chubb Personal Insurance (CPI) net written premiums grew 5% in the first quarter to $792 million. CPI’s combined ratio was 79.7%, compared to 84.5% in the first quarter of 2005. Catastrophe losses were 3.6 percentage points in 2006 and 1.4 points in 2005.
     The Homeowners line grew 8%, and the combined ratio was 73.7%. The Personal Automobile line grew 6% and had a combined ratio of 90.0%, while other personal lines declined 6% and had a combined ratio of 90.7%.
     Chubb Commercial Insurance (CCI) net written premiums for the first quarter declined 3% to $1.3 billion. The combined ratio was 78.8%, including a 2 percentage point favorable impact of catastrophes due to the reduction in reinsurance reinstatement premium costs. In the first quarter of 2005, CCI’s combined ratio was 84.0%, including an unfavorable 0.4 percentage point impact of catastrophes. Excluding the impact of catastrophes, CCI’s first quarter combined ratio was 80.8% in 2006 and 83.6% in 2005.
     Average renewal rates in the U.S. were flat for CCI, which retained 82% of the U.S. premiums that came up for renewal. In the U.S., the ratio of new to lost business was 0.7 to 1.
     Chubb Specialty Insurance (CSI) net written premiums were down 3% to $680 million. The combined ratio was 90.7%, compared to 105.0% in the first quarter of 2005.


 

3

     Professional Liability (PL) net written premiums were down 5%, and the business had a combined ratio of 95.6%. Average renewal rates in the U.S. for PL were down 1%, and renewal retention was 75%. The ratio of new to lost business in the U.S. was 0.8 to 1. Excluding the hospital medical malpractice and managed care errors & omissions businesses which CSI exited on July 1, 2005, PL premiums were flat, renewal retention in the U.S. was 87% and the ratio of new to lost business in the U.S. was 1.8 to 1.
     Surety net written premiums in the first quarter were up 23% largely because of the non-renewal of a reinsurance treaty, and the combined ratio was 37.0%.
Webcast Conference Call to be Held Today at 5:00 P.M.
     Chubb’s senior management will discuss the company’s first quarter performance with investors and analysts today, April 24th, at 5:00 P.M. Eastern Daylight Time. The conference call will be webcast live on the Internet at www.chubb.com and archived later in the day for replay. The company has posted its Supplementary Investor Information Report at www.chubb.com.
     All financial results in this release and attachments are unaudited.
About Chubb
     Founded in 1882, the Chubb Group of Insurance Companies provide property and casualty insurance for personal and commercial customers worldwide through 8,000 independent agents and brokers. Chubb’s global network includes branches and affiliates throughout North America, Europe, Latin America, Asia and Australia.
         
For further information contact:
  Investors:   Glenn A. Montgomery
 
      (908) 903-2365
 
  Media:   Mark E. Greenberg
 
      (908) 903-2682


 

4

Definitions of Key Terms
Operating Income
Operating income, a non-GAAP financial measure, is net income excluding after-tax realized investment gains and losses. Management uses operating income, among other measures, to evaluate its performance because the realization of investment gains and losses in any given period is largely discretionary as to timing and can fluctuate significantly, which could distort the analysis of trends.
Underwriting Income (Loss)
Management evaluates underwriting results separately from investment results. The underwriting operations consist of four separate business units: personal insurance, commercial insurance, specialty insurance and reinsurance assumed. Performance of the business units is measured based on statutory underwriting results. Statutory accounting principles applicable to property and casualty insurance companies differ in certain respects from generally accepted accounting principles (GAAP). Under statutory accounting principles, policy acquisition and other underwriting expenses are recognized immediately, not at the time premiums are earned. Statutory underwriting income (loss) is arrived at by reducing premiums earned by losses and loss expenses incurred and statutory underwriting expenses incurred.
Management uses underwriting results determined in accordance with GAAP, among other measures, to assess the overall performance of the underwriting operations. To convert statutory underwriting results to a GAAP basis, policy acquisition expenses are deferred and amortized over the period in which the related premiums are earned. Underwriting income (loss) determined in accordance with GAAP is defined as premiums earned less losses and loss expenses incurred and GAAP underwriting expenses incurred.
Property and Casualty Investment Income After Income Tax
Management uses property and casualty investment income after income tax, a non-GAAP financial measure, to evaluate its investment 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.
Book Value per Common Share with Available-for-Sale Fixed Maturities at Amortized Cost
Book value per common share represents the portion of consolidated shareholders’ equity attributable to one share of common stock outstanding as of the balance sheet date. Consolidated shareholders’ equity includes, as part of accumulated other comprehensive income, the after-tax appreciation or depreciation on the Corporation’s available-for-sale fixed maturities, which are 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 Loss and Expense Ratio or Combined Ratio
The combined loss and expense ratio, expressed as a percentage, is the key measure of underwriting profitability. Management uses the combined loss and expense ratio calculated in accordance with statutory accounting principles applicable to property and casualty insurance companies to evaluate the performance of the underwriting operations. It is the sum of the ratio of losses and loss expenses to premiums earned (loss ratio) plus the ratio of statutory underwriting expenses to premiums written (expense ratio) after reducing both premium amounts by dividends to policyholders.


 

5

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 management’s guidance for 2006 operating income per share and related assumptions. 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;
 
  the ability to retain existing business;
 
  our expectations with respect to cash flow projections and investment income and with respect to other income;
 
  the adequacy of loss reserves, including:
  -   our expectations relating to reinsurance recoverables;
 
  -   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;
 
  -   our estimates relating to ultimate asbestos liabilities;
 
  -   the impact from the bankruptcy protection sought by various asbestos producers and other related businesses;
 
  -   the willingness of parties, including us, to settle disputes;
 
  -   developments in judicial decisions or regulatory or legislative actions relating to coverage and liability for asbestos, toxic waste and mold claims;
 
  -   development of new theories of liability;
  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;


 

6

  the impact of economic factors on companies on whose behalf we have issued surety bonds, and in particular, on those companies that have filed for bankruptcy or otherwise experienced deterioration in creditworthiness;
 
  the effects of disclosures by, and investigations of, public companies relating to possible accounting irregularities, practices in the financial services industry and other corporate governance issues, including:
  -   the effects on the capital markets and the markets for directors and officers and errors and omissions insurance;
 
  -   claims and litigation arising out of actual or alleged accounting or other corporate malfeasance by other companies;
 
  -   claims and litigation arising out of practices in the financial services industry;
 
  -   legislative or regulatory proposals or changes;
  the effects of investigations into market practices, in particular contingent commissions and loss mitigation and finite reinsurance arrangements, in the U.S. property and casualty insurance industry together with any legal or regulatory proceedings, related settlements and industry reform arising therefrom;
 
  the impact of legislative and regulatory developments on our business, including those relating to terrorism and large-scale catastrophes;
 
  any downgrade in our claims-paying, financial strength or other credit ratings;
 
  the ability of our subsidiaries to pay us dividends;
 
  general economic and market conditions including:
  -   changes in interest rates, market credit spreads and the performance of the financial markets;
 
  -   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;
 
  -   changes in the litigation environment; and
  our ability to implement management’s strategic plans and initiatives.
     The Corporation assumes no obligation to update any forward-looking information set forth in this document, which speak as of the date hereof.


 

7

THE CHUBB CORPORATION
SUPPLEMENTARY FINANCIAL DATA
(Unaudited)
                 
    Three Months Ended  
    March 31  
    2006     2005  
    (in millions)  
PROPERTY AND CASUALTY INSURANCE
               
Underwriting
               
Net Premiums Written
  $ 2,925     $ 3,056  
Decrease (Increase) in Unearned Premiums
    94       (21 )
 
           
Premiums Earned
    3,019       3,035  
 
           
Losses and Loss Expenses
    1,618       1,835  
Operating Costs and Expenses
    850       879  
Decrease (Increase) in Deferred Policy Acquisition Costs
    8       (5 )
Dividends to Policyholders
    7       7  
 
           
 
               
Underwriting Income
    536       319  
 
           
 
               
Investments
               
Investment Income Before Expenses
    357       321  
Investment Expenses
    9       8  
 
           
 
               
Investment Income
    348       313  
 
           
 
               
Other Income (Charges)
    5       (3 )
 
           
 
               
Property and Casualty Income
    889       629  
 
               
CORPORATE AND OTHER
    (43 )     (62 )
 
           
 
               
CONSOLIDATED OPERATING INCOME BEFORE INCOME TAX
    846       567  
 
               
Federal and Foreign Income Tax
    243       126  
 
           
 
               
CONSOLIDATED OPERATING INCOME
    603       441  
 
               
REALIZED INVESTMENT GAINS AFTER INCOME TAX
    69       29  
 
           
 
               
CONSOLIDATED NET INCOME
  $ 672     $ 470  
 
           
 
               
PROPERTY AND CASUALTY INVESTMENT INCOME AFTER INCOME TAX
  $ 279     $ 252  
 
           

 


 

8

                 
    Three Months Ended  
    March 31  
    2006     2005  
OUTSTANDING SHARE DATA
               
(in millions)
               
                 
Average Common and Potentially Dilutive Shares
    424.1       396.9  
Actual Common Shares at End of Period
    414.9       390.7  
 
               
DILUTED EARNINGS PER SHARE DATA
               
Operating Income
  $ 1.42     $ 1.11  
Realized Investment Gains
    .16       .07  
 
           
Net Income
  $ 1.58     $ 1.18  
 
           
 
               
Effect of Catastrophes
  $     $ (.03 )
 
           
                         
    Mar. 31   Dec. 31   Mar. 31
    2006   2005   2005
BOOK VALUE PER COMMON SHARE
  $ 30.37     $ 29.67     $ 26.62  
 
                       
BOOK VALUE PER COMMON SHARE, with Available-for-Sale Fixed Maturities at Amortized Cost
    30.39       29.12       25.95  
Share and per share amounts have been retroactively adjusted to reflect the two- for-one stock split effective March 31, 2006.
PROPERTY AND CASUALTY UNDERWRITING RATIOS
THREE MONTHS ENDED MARCH 31
                 
    2006   2005
Losses and Loss Expenses to Premiums Earned
    53.8 %     60.6 %
Underwriting Expenses to Premiums Written
    29.1       28.8  
 
               
 
               
Combined Loss and Expense Ratio
    82.9 %     89.4 %
 
               
 
               
Effect of Catastrophes on Combined Loss and Expense Ratio
    .1 %     .6 %
PROPERTY AND CASUALTY LOSSES AND LOSS EXPENSES COMPONENTS
THREE MONTHS ENDED MARCH 31
                 
    2006     2005  
    (in millions)  
Paid Losses and Loss Expenses
  $ 1,300     $ 1,325  
Increase in Unpaid Losses and Loss Expenses
    318       510  
 
           
 
               
Total Losses and Loss Expenses
  $ 1,618     $ 1,835  
 
           

 


 

9

PROPERTY AND CASUALTY PRODUCT MIX
THREE MONTHS ENDED MARCH 31
                                         
    Net Premiums Written     Combined Loss and  
                    % Increase     Expense Ratios  
    2006     2005     (Decrease)     2006     2005  
    (in millions)                          
Personal Insurance
                                       
Automobile
  $ 155     $ 146       6 %     90.0 %     95.7 %
Homeowners
    488       452       8       73.7       80.6  
Other
    149       158       (6 )     90.7       86.8  
 
                               
Total Personal
    792       756       5       79.7       84.5  
 
                               
 
                                       
Commercial Insurance
                                       
Multiple Peril
    326       336       (3 )     70.4       82.2  
Casualty
    440       452       (3 )     94.4       93.7  
Workers’ Compensation
    256       278       (8 )     78.4       86.1  
Property and Marine
    303       299       1       65.7       70.1  
 
                               
Total Commercial
    1,325       1,365       (3 )     78.8       84.0  
 
                               
 
                                       
Specialty Insurance
                                       
Professional Liability
    615       646       (5 )     95.6       101.6  
Surety
    65       53       23       37.0       154.1  
 
                               
Total Specialty
    680       699       (3 )     90.7       105.0  
 
                               
 
                                       
Total Insurance
    2,797       2,820       (1 )     82.2       89.6  
 
                                       
Reinsurance Assumed
    128       236       (46 )     96.3       88.0  
 
                               
 
                                       
Total
  $ 2,925     $ 3,056       (4 )     82.9 %     89.4 %
 
                               

 

EX-99.2 3 y20109exv99w2.htm EX-99.2: SUPPLEMENTARY INVESTOR INFORMATION REPORT EX-99.2:
 

Exhibit 99.2

         
The
Chubb
Corporation

  Supplementary
Investor
Information
  March 31, 2006
     
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
MARCH 31, 2006
         
      Page  
The Chubb Corporation:
       
Consolidated Balance Sheet Highlights
    1  
Share Repurchase Activity
    2  
 
       
Summary of Invested Assets:
       
Corporate
    3  
Property and Casualty
    3  
 
       
Investment Income After Taxes:
       
Corporate
    4  
Property and Casualty
    4  
 
       
Property and Casualty Insurance Group:
       
Statutory Policyholders’ Surplus
    4  
Change in Net Unpaid Losses
    5  
Underwriting Results
    6-10  
 
       
Definitions of Key Terms
    11  

 


 

THE CHUBB CORPORATION
March 31, 2006
Share and per share amounts have been retroactively adjusted to reflect the two-for-one stock split effective March 31, 2006.

 


 

CONSOLIDATED BALANCE SHEET HIGHLIGHTS
                 
    Mar. 31     Dec. 31  
    2006     2005  
    (in millions)  
Invested Assets (at carrying value)
               
Short Term Investments
  $ 1,653     $ 1,899  
Fixed Maturities
               
Tax Exempt
    16,375       15,955  
Taxable
    14,504       14,568  
Equity Securities
    2,387       2,212  
 
           
Total Invested Assets
  $ 34,919     $ 34,634  
 
           
 
               
Unrealized Appreciation of Fixed Maturities Carried at Amortized Cost
  $ 9     $ 11  
 
           
 
               
Capitalization
               
 
               
Long Term Debt
  $ 2,462     $ 2,467  
Shareholders’ Equity
    12,600       12,407  
 
           
Total Capitalization
  $ 15,062     $ 14,874  
 
           
 
               
DEBT AS A PERCENTAGE OF TOTAL CAPITALIZATION
    16.3 %     16.6 %
 
               
Actual Common Shares Outstanding
    414.9       418.1  
 
               
Book Value Per Common Share
  $ 30.37     $ 29.67  
 
               
Book Value Per Common Share, with Available-for-Sale Fixed Maturities at Amortized Cost
  $ 30.39     $ 29.12  

Page 1 of 11


 

THE CHUBB CORPORATION
SHARE REPURCHASE ACTIVITY
(dollars in millions, except per share amounts)
                 
    Three Months   From
    Ended   December 2005
    March 31, 2006   to March 31, 2006
Cost of Shares Repurchased
  $ 249     $ 384  
 
               
Average Cost Per Share
  $ 47.73     $ 47.97  
 
               
Shares Repurchased
    5,225,562       8,013,362  
In December 2005, the Board of Directors authorized the repurchase of up to 28,000,000 shares of the Corporation’s common stock. The authorization has no expiration date. As of March 31, 2006, 19,986,638 shares remained under the share repurchase authorization.

Page 2 of 11


 

THE CHUBB CORPORATION
SUMMARY OF INVESTED ASSETS
CORPORATE
                                                 
    Cost or     Market     Carrying  
    Amortized Cost     Value     Value  
    Mar. 31     Dec. 31     Mar. 31     Dec. 31     Mar. 31     Dec. 31  
    2006     2005     2006     2005     2006     2005  
    (in millions)  
Short Term Investments
  $ 827     $ 929     $ 827     $ 929     $ 827     $ 929  
 
                                               
Taxable Fixed Maturities
    1,339       1,355       1,305       1,338       1,305       1,338  
 
                                               
Equity Securities
    4       5       8       8       8       8  
 
                                   
 
                                               
TOTAL
  $ 2,170     $ 2,289     $ 2,140     $ 2,275     $ 2,140     $ 2,275  
 
                                   
PROPERTY AND CASUALTY
                                                 
    Cost or     Market     Carrying  
    Amortized Cost     Value     Value  
    Mar. 31     Dec. 31     Mar. 31     Dec. 31     Mar. 31     Dec. 31  
    2006     2005     2006     2005     2006     2005  
    (in millions)  
Short Term Investments
  $ 826     $ 970     $ 826     $ 970     $ 826     $ 970  
 
                                               
Fixed Maturities
                                               
 
                                               
Tax Exempt
    16,243       15,654       16,384       15,966       16,375       15,955  
 
                                               
Taxable
    13,313       13,160       13,199       13,230       13,199       13,230  
 
                                               
Common Stocks
    2,181       2,031       2,324       2,149       2,324       2,149  
 
                                               
Preferred Stocks
    52       52       55       55       55       55  
 
                                   
 
                                               
TOTAL
  $ 32,615     $ 31,867     $ 32,788     $ 32,370     $ 32,779     $ 32,359  
 
                                   

Page 3 of 11


 

THE CHUBB CORPORATION
INVESTMENT INCOME AFTER TAXES
                 
    THREE MONTHS ENDED  
    MARCH 31  
    2006     2005  
 
  (in millions)  
CORPORATE INVESTMENT INCOME
  $ 15     $ 8  
 
           
 
               
PROPERTY AND CASUALTY INVESTMENT INCOME
               
(Amounts are shown net of applicable income taxes)
               
 
               
Dividends
  $ 8     $ 12  
Taxable Interest
    113       96  
Tax Exempt Interest
    164       149  
Investment Expenses
    (6 )     (5 )
 
           
TOTAL
  $ 279     $ 252  
 
           
 
               
Effective Tax Rate
    19.8 %     19.5 %
 
               
After Tax Annualized Yield
    3.45 %     3.42 %
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
                         
    Mar. 31   Mar. 31   Dec. 31
    2006   2005   2005
    (in millions)
Estimated Statutory Policyholders’ Surplus
  $ 9,650     $ 8,230     $ 8,910  
 
                       
Rolling Year Statutory Net Premiums Written
    12,112       12,043       12,244  
 
                       
Ratio of Statutory Net Premiums Written to Policyholders’ Surplus
    1.26:1       1.46:1       1.37:1  
Statutory Policyholders’ Surplus and Net Premiums Written include all domestic and foreign property and casualty subsidiaries.

Page 4 of 11


 

THE CHUBB CORPORATION
PROPERTY AND CASUALTY
CHANGE IN NET UNPAID LOSSES
THREE MONTHS ENDED MARCH 31, 2006
                                         
    Net Unpaid Losses                     All Other  
                            IBNR     Unpaid Losses  
                    Increase     Increase     Increase  
    3/31/06     12/31/05     (Decrease)     (Decrease)     (Decrease)  
                    (in millions)                  
Personal Insurance
                                       
Automobile
  $ 421     $ 418     $ 3     $ 1     $ 2  
Homeowners
    684       697       (13 )     1       (14 )
Other
    578       580       (2 )     23       (25 )
 
                             
Total Personal
    1,683       1,695       (12 )     25       (37 )
 
                             
Commercial Insurance
                                       
Multiple Peril
    1,593       1,596       (3 )     7       (10 )
Casualty
    4,936       4,837       99       93       6  
Workers’ Compensation
    1,600       1,551       49       47       2  
Property and Marine
    698       755       (57 )     (15 )     (42 )
 
                             
Total Commercial
    8,827       8,739       88       132       (44 )
 
                             
Specialty Insurance
                                       
Professional Liability
    7,021       6,777       244       216       28  
Surety
    49       46       3       1       2  
 
                             
Total Specialty
    7,070       6,823       247       217       30  
 
                             
Total Insurance
    17,580       17,257       323       374       (51 )
Reinsurance Assumed
    1,451       1,456       (5 )     (39 )     34  
 
                             
 
                                       
Total
  $ 19,031     $ 18,713     $ 318     $ 335     $ (17 )
 
                             

Page 5 of 11


 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(MILLIONS OF DOLLARS)
                                                                 
    Personal                     Other     Total  
    Automobile     Homeowners     Personal     Personal  
    2006     2005     2006     2005     2006     2005     2006     2005  
Net Premiums Written
  $ 155     $ 146     $ 488     $ 452     $ 149     $ 158     $ 792     $ 756  
Increase (Decrease) in Unearned Premiums
    (9 )     (11 )     (46 )     (45 )     10       19       (45 )     (37 )
 
                                               
 
                                                               
Net Premiums Earned
    164       157       534       497       139       139       837       793  
 
                                               
 
                                                               
Net Losses Paid
    98       94       236       252       87       53       421       399  
Increase (Decrease) in Outstanding Losses
    3       12       (13 )     (13 )     (2 )     29       (12 )     28  
 
                                               
 
                                                               
Net Losses Incurred
    101       106       223       239       85       82       409       427  
 
                                               
 
                                                               
Expenses Incurred
    44       41       156       147       44       44       244       232  
Dividends Incurred
                                               
 
                                               
 
                                                               
Statutory Underwriting Income (Loss)
  $ 19     $ 10     $ 155     $ 111     $ 10     $ 13     $ 184     $ 134  
 
                                               
 
                                                               
Ratios After Dividends to Policyholders:
                                                               
 
                                                               
Loss
    61.6 %     67.6 %     41.7 %     48.0 %     61.2 %     58.6 %     48.9 %     53.7 %
Expense
    28.4       28.1       32.0       32.6       29.5       28.2       30.8       30.8  
 
                                               
 
                                                               
Combined
    90.0 %     95.7 %     73.7 %     80.6 %     90.7 %     86.8 %     79.7 %     84.5 %
 
                                               
 
                                                               
Premiums Written as a % of Total
    5.3 %     4.7 %     16.7 %     14.8 %     5.1 %     5.2 %     27.1 %     24.7 %

Page 6 of 11


 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(MILLIONS OF DOLLARS)
                                                                                 
                                    Commercial     Commercial        
    Commercial     Commercial     Workers’     Property     Total  
    Multiple Peril     Casualty     Compensation     and Marine     Commercial  
    2006     2005     2006     2005     2006     2005     2006     2005     2006     2005  
Net Premiums Written
  $ 326     $ 336     $ 440     $ 452     $ 256     $ 278     $ 303     $ 299     $ 1,325     $ 1,365  
Increase (Decrease) in Unearned Premiums
    (1 )     5       5       26       26       49       16       28       46       108  
 
                                                           
 
                                                                               
Net Premiums Earned
    327       331       435       426       230       229       287       271       1,279       1,257  
 
                                                           
 
                                                                               
Net Losses Paid
    129       157       191       150       82       80       150       106       552       493  
Increase (Decrease) in Outstanding Losses
    (3 )     7       99       135       49       67       (57 )     (13 )     88       196  
 
                                                           
 
                                                                               
Net Losses Incurred
    126       164       290       285       131       147       93       93       640       689  
 
                                                           
 
                                                                               
Expenses Incurred
    104       110       122       121       49       55       101       107       376       393  
Dividends Incurred
                            7       6                   7       6  
 
                                                           
 
                                                                               
Statutory Underwriting Income (Loss)
  $ 97     $ 57     $ 23     $ 20     $ 43     $ 21     $ 93     $ 71     $ 256     $ 169  
 
                                                           
 
                                                                               
Ratios After Dividends to Policyholders:
                                                                               
 
                                                                               
Loss
    38.5 %     49.5 %     66.7 %     66.8 %     58.7 %     65.9 %     32.4 %     34.4 %     50.3 %     55.1 %
Expense
    31.9       32.7       27.7       26.9       19.7       20.2       33.3       35.7       28.5       28.9  
 
                                                           
 
                                                                               
Combined
    70.4 %     82.2 %     94.4 %     93.7 %     78.4 %     86.1 %     65.7 %     70.1 %     78.8 %     84.0 %
 
                                                           
 
                                                                               
Premiums Written as a % of Total
    11.1 %     11.0 %     15.0 %     14.8 %     8.8 %     9.1 %     10.4 %     9.8 %     45.3 %     44.7 %

Page 7 of 11


 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(MILLIONS OF DOLLARS)
                                                 
    Professional                     Total  
    Liability     Surety     Specialty  
    2006     2005     2006     2005     2006     2005  
Net Premiums Written
  $ 615     $ 646     $ 65     $ 53     $ 680     $ 699  
Increase (Decrease) in Unearned Premiums
    (70 )     (32 )     1       9       (69 )     (23 )
 
                                   
 
                                               
Net Premiums Earned
    685       678       64       44       749       722  
 
                                   
 
                                               
Net Losses Paid
    236       325       (1 )     18       235       343  
Increase (Decrease) in Outstanding Losses
    244       200       3       32       247       232  
 
                                   
 
                                               
Net Losses Incurred
    480       525       2       50       482       575  
 
                                   
 
                                               
Expenses Incurred
    157       156       22       20       179       176  
Dividends Incurred
                      1             1  
 
                                   
 
                                               
Statutory Underwriting Income (Loss)
  $ 48     $ (3 )   $ 40     $ (27 )   $ 88     $ (30 )
 
                                   
 
                                               
Ratios After Dividends to Policyholders:
                                               
 
                                               
Loss
    70.1 %     77.5 %     3.1 %     117.0 %     64.4 %     79.9 %
Expense
    25.5       24.1       33.9       37.1       26.3       25.1  
 
                                   
 
                                               
Combined
    95.6 %     101.6 %     37.0 %     154.1 %     90.7 %     105.0 %
 
                                   
 
                                               
Premiums Written as a % of Total
    21.0 %     21.1 %     2.2 %     1.8 %     23.2 %     22.9 %

Page 8 of 11


 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(MILLIONS OF DOLLARS)
                                                 
    Total     Reinsurance     Worldwide  
    Insurance     Assumed     Total  
    2006     2005     2006     2005     2006     2005  
Net Premiums Written
  $ 2,797     $ 2,820     $ 128     $ 236     $ 2,925     $ 3,056  
Increase (Decrease) in Unearned Premiums
    (68 )     48       (26 )     (27 )     (94 )     21  
 
                                   
 
                                               
Net Premiums Earned
    2,865       2,772       154       263       3,019       3,035  
 
                                   
 
                                               
Net Losses Paid
    1,208       1,235       92       90       1,300       1,325  
Increase (Decrease) in Outstanding Losses
    323       456       (5 )     54       318       510  
 
                                   
 
                                               
Net Losses Incurred
    1,531       1,691       87       144       1,618       1,835  
 
                                   
 
                                               
Expenses Incurred
    799       801       51       78       850       879  
Dividends Incurred
    7       7                   7       7  
 
                                   
 
                                               
Statutory Underwriting Income (Loss)
  $ 528     $ 273     $ 16     $ 41       544       314  
 
                                       
 
                                               
Increase (Decrease) in Deferred Acquisition Costs
                                    (8 )     5  
 
                                           
GAAP Underwriting Income
                                  $ 536     $ 319  
 
                                           
 
                                               
Ratios After Dividends to Policyholders:
                                               
 
                                               
Loss
    53.6 %     61.1 %     56.5 %     55.0 %     53.8 %     60.6 %
Expense
    28.6       28.5       39.8       33.0       29.1       28.8  
 
                                   
 
                                               
Combined
    82.2 %     89.6 %     96.3 %     88.0 %     82.9 %     89.4 %
 
                                   
 
                                               
Premiums Written as a % of Total
    95.6 %     92.3 %     4.4 %     7.7 %     100.0 %     100.0 %

Page 9 of 11


 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(MILLIONS OF DOLLARS)
                                                 
                                    Worldwide  
    United States     Foreign     Total  
    2006     2005     2006     2005     2006     2005  
Net Premiums Written
  $ 2,268     $ 2,389     $ 657     $ 667     $ 2,925     $ 3,056  
Increase (Decrease) in Unearned Premiums
    (176 )     (77 )     82       98       (94 )     21  
 
                                   
 
                                               
Net Premiums Earned
    2,444       2,466       575       569       3,019       3,035  
 
                                   
 
                                               
Net Losses Paid
    1,093       1,170       207       155       1,300       1,325  
Increase (Decrease) in Outstanding Losses
    237       355       81       155       318       510  
 
                                   
 
                                               
Net Losses Incurred
    1,330       1,525       288       310       1,618       1,835  
 
                                   
 
                                               
Expenses Incurred
    621       656       229       223       850       879  
Dividends Incurred
    7       7                   7       7  
 
                                   
 
                                               
Statutory Underwriting Income (Loss)
  $ 486     $ 278     $ 58     $ 36       544       314  
 
                                       
 
                                               
Increase (Decrease) in Deferred Acquisition Costs
                                    (8 )     5  
 
                                           
GAAP Underwriting Income
                                  $ 536     $ 319  
 
                                           
Ratios After Dividends to Policyholders:
                                               
 
                                               
Loss
    54.6 %     62.0 %     50.1 %     54.5 %     53.8 %     60.6 %
Expense
    27.5       27.5       34.9       33.4       29.1       28.8  
 
                                   
 
                                               
Combined
    82.1 %     89.5 %     85.0 %     87.9 %     82.9 %     89.4 %
 
                                   
 
                                               
Premiums Written as a % of Total
    77.5 %     78.2 %     22.5 %     21.8 %     100.0 %     100.0 %

Page 10 of 11


 

THE CHUBB CORPORATION
Definitions of Key Terms
Underwriting Income (Loss)
Management evaluates underwriting results separately from investment results. The underwriting operations consist of four separate business units: personal insurance, commercial insurance, specialty insurance and reinsurance assumed. Performance of the business units is measured based on statutory underwriting results. Statutory accounting principles applicable to property and casualty insurance companies differ in certain respects from generally accepted accounting principles (GAAP). Under statutory accounting principles, policy acquisition and other underwriting expenses are recognized immediately, not at the time premiums are earned. Statutory underwriting income (loss) is arrived at by reducing premiums earned by losses and loss expenses incurred and statutory underwriting expenses incurred.
Management uses underwriting results determined in accordance with GAAP, among other measures, to assess the overall performance of the underwriting operations. To convert statutory underwriting results to a GAAP basis, policy acquisition expenses are deferred and amortized over the period in which the related premiums are earned. Underwriting income (loss) determined in accordance with GAAP is defined as premiums earned less losses and loss expenses incurred and GAAP underwriting expenses incurred.
Property and Casualty Investment Income After Income Tax
Management uses property and casualty investment income after income tax, a non-GAAP financial measure, to evaluate its investment 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 common share represents the portion of consolidated shareholders’ equity attributable to one share of common stock outstanding as of the balance sheet date. Consolidated shareholders’ equity includes, as part of accumulated other comprehensive income, the after-tax appreciation or depreciation on the Corporation’s available-for-sale fixed maturities, which are 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. Management uses the combined loss and expense ratio calculated in accordance with statutory accounting principles applicable to property and casualty insurance companies to evaluate the performance of the underwriting operations. It is the sum of the ratio of losses and loss expenses to premiums earned (loss ratio) plus the ratio of statutory underwriting expenses to premiums written (expense ratio) after reducing both premium amounts by dividends to policyholders.

Page 11 of 11

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-----END PRIVACY-ENHANCED MESSAGE-----