-----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, IoCpkI2wlXTKSOR1MmQy76E1WC+UfxxxuXtHC17uPiv7+vutvfiaGSKggqO1ZRmi PTyka4Vlf+/MdNeh5hMV4g== 0000950123-07-010222.txt : 20070724 0000950123-07-010222.hdr.sgml : 20070724 20070724162117 ACCESSION NUMBER: 0000950123-07-010222 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20070724 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070724 DATE AS OF CHANGE: 20070724 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: 07996462 BUSINESS ADDRESS: STREET 1: 15 MOUNTAIN VIEW ROAD CITY: WARREN STATE: NJ ZIP: 07061 BUSINESS PHONE: 9089032000 MAIL ADDRESS: STREET 1: 15 MOUNTAIN VIEW ROAD CITY: WARREN STATE: NJ ZIP: 07061 8-K 1 y37396e8vk.htm FORM 8-K FORM 8-K
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported) July 24, 2007
THE CHUBB CORPORATION
 
(Exact name of registrant as specified in its charter)
         
New Jersey   1-8661   13-2595722
 
(State or other jurisdiction of
incorporation) 		  (Commission
File Number) 		  (IRS Employer
Identification No.)
     
15 Mountain View Road, 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))
 
 

 

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Item 2.02 Results of Operations and Financial Condition.
The following information, including the text of the exhibits attached hereto, is furnished pursuant to Item 2.02 of Form 8-K. On July 24, 2007, The Chubb Corporation (Chubb) issued a press release announcing its financial results for the quarter ended June 30, 2007. On July 24, 2007, Chubb also posted on its web site at www.chubb.com the Supplementary Investor Information Report (SIIR) relating to its 2007 second quarter results. Copies of the press release and the SIIR, both of which are incorporated by reference into this Item 2.02 as if fully set forth herein, are 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 2007 second quarter results, scheduled to be webcast at 5:00 P.M. on July 24, 2007, 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.
Item 9.01 Financial Statements and Exhibits.
     (d) Exhibits.
  99.1   Press release dated July 24, 2007 (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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Item 2.02 Results of Operations and Financial Condition
Item 9.01 Financial Statements and Exhibits
SIGNATURES
EXHIBIT INDEX TO CURRENT REPORT ON FORM 8-K DATED JULY 24, 2007
EX-99.1: PRESS RELEASE
EX-99.2: SUPPLEMENTARY INVESTOR INFORMATION

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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: July 24, 2007  By:   /s/ Henry B. Schram    
    Name:   Henry B. Schram   
    Title:   Senior Vice President and
     Chief Accounting Officer 		  
 

 

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EXHIBIT INDEX TO CURRENT REPORT ON FORM 8-K
DATED JULY 24, 2007
         
Exhibit No.   Description
       
 
  99.1    
Press release dated July 24, 2007 (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 y37396exv99w1.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 Second Quarter Net Income per Share of $1.75;
Operating Income per Share Increases 19% to a Record $1.60;
Combined Ratio Improves to 82.7% from 85.2%;
2007 Operating Income per Share Guidance Is Raised to Range of $5.70 to $6.10
     WARREN, New Jersey, July 24, 2007 — The Chubb Corporation [NYSE: CB] today reported that net income in the second quarter of 2007 was $709 million or $1.75 per share, compared to $598 million or $1.41 per share in the second quarter of 2006.
     Operating income, which the company defines as net income excluding after-tax realized investment gains and losses, increased to $648 million from $571 million in the second quarter of 2006. Operating income per share increased 19% to a record $1.60 from $1.35.
     Total net written premiums for the second quarter declined 1% to $3.1 billion. Net written premiums for the insurance business increased 2% — 1% in the U.S. and 7% outside the U.S. (3% in local currencies). Net written premiums for the reinsurance assumed business declined 75%, reflecting the impact of the Chubb Re-Harbor Point transaction completed in December 2005.
     The second quarter combined loss and expense ratio was 82.7% in 2007, compared to 85.2% in 2006. Catastrophe losses for the second quarter of 2007, primarily from storms on the East Coast of the United States in April and in England in June, accounted for 3.9 percentage points of the combined ratio. In the second quarter of 2006, catastrophe losses accounted for 2.7 points of the combined ratio. The expense ratio for the second quarter was 29.6% in 2007 and 28.5% in 2006.
     Property and casualty investment income after taxes for the second quarter increased 9% to $313 million in 2007 from $288 million in 2006.
     During the second quarter, Chubb repurchased 9,891,000 shares of its common stock at a total cost of $535 million. As of June 30, 2007, there were 18,119,361 shares of common stock available for repurchase under the current authorization.

 

2

     “We had another outstanding quarter,” said John D. Finnegan, Chairman, President and Chief Executive Officer, “with a record-low combined ratio and substantial earnings contributions from all three business units. We are particularly pleased that we have been able to generate modest premium growth in our insurance business while maintaining underwriting discipline in a challenging market environment.”
Six-Month Results
     For the first six months of 2007, net income was $1.4 billion or $3.46 per share, compared with $1.3 billion or $2.99 per share for the first half of 2006. Operating income for the first half of 2007 totaled $1.3 billion or a record $3.13 per share, compared with $1.2 billion or $2.77 per share for the first half of 2006.
     Total net written premiums for the first six months declined 1% to $5.9 billion. Net written premiums for the insurance business increased 2% — flat in the U.S. and up 7% outside the U.S. (up 2% in local currencies). Net written premiums for the reinsurance assumed business declined 71%.
     The combined loss and expense ratio for the first six months was 83.1% in 2007, compared to 84.0% in 2006. Catastrophe losses for the first half of 2007 accounted for 3.2 percentage points of the combined ratio. In the first half of 2006, the impact of catastrophes accounted for 1.4 points of the combined ratio. The expense ratio for the first six months was 30.0% in 2007 and 28.8% in 2006.
     Property and casualty investment income after taxes for the first six months increased 9% to $618 million in 2007 from $567 million in 2006.
     During the first six months, Chubb repurchased 21,726,577 shares of its common stock at a total cost of $1.1 billion.
Outlook for 2007
     “In light of Chubb’s outstanding first half results and our positive outlook for the second half,” said Mr. Finnegan, “we are raising our guidance for 2007 full year operating income per share to a range of $5.70 to $6.10.” The company’s previous guidance, provided in January 2007, was $5.00 to $5.40. The revised guidance continues to assume 4 percentage points of catastrophe losses for the full year. The impact of each point of catastrophe losses on operating income per share for the year is approximately $0.19.

 

3

     The revised operating income guidance also assumes:
•   Flat to slightly higher net written premiums for the insurance business for the full year;
 
•   A combined ratio between 84% and 86% for the year, based on combined ratios of 85% to 87% for Chubb Personal Insurance, 87% to 89% for Chubb Commercial Insurance and 79% to 81% for Chubb Specialty Insurance. The assumption of 4 points of catastrophe losses for the full year implies higher second half catastrophe losses than the 3.2 points experienced in the first half;
 
•   Growth of property and casualty investment income after taxes of 7% to 9% for the year; and
 
•   Average diluted shares outstanding of 401 million for the year.
     Guidance and related assumptions are subject to the risks outlined in the company’s forward-looking information safe-harbor statement below.
Second Quarter Operations Review
     Chubb Personal Insurance (CPI) net written premiums grew 4% in the second quarter to $975 million. CPI’s combined ratio for the quarter was 85.3%, compared to 78.5% in the second quarter of 2006. Catastrophe losses for the quarter were 8.1 percentage points in 2007 and 4.8 points in 2006.
     Net written premiums for Homeowners grew 7%, and the combined ratio was 83.8%. Personal Automobile net written premiums declined 10%, and the combined ratio was 82.3%. Other Personal lines grew 10% and had a combined ratio of 93.8%.
     Chubb Commercial Insurance (CCI) net written premiums increased 1% in the second quarter to $1.3 billion. The combined ratio for the quarter was 85.4% in both 2007 and 2006. Catastrophe losses accounted for 3.3 percentage points in the second quarter of 2007 and 3.1 points in the corresponding quarter of 2006.
     Average second quarter renewal rates in the U.S. were down 3% 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 1 to 1.
     Chubb Specialty Insurance (CSI) net written premiums increased 1% in the second quarter to $743 million. The combined ratio was 75.6%, compared to 89.0% in the second quarter of 2006.

 

4

     Professional Liability (PL) net written premiums declined 1%, and the business had a combined ratio of 80.5%. Average second quarter renewal rates in the U.S. were down 6% for PL, which retained 90% of the U.S. premiums that came up for renewal. In the U.S., the ratio of new to lost business was 1.7 to 1.
     Surety net written premiums were up 13%, and the combined ratio was 32.7%.
Webcast Conference Call to be Held Today at 5 P.M.
     Chubb’s senior management will discuss the company’s second quarter performance with investors and analysts today, July 24th, at 5 P.M. Eastern Daylight Time. The conference call will be webcast live on the Internet at http://www.chubb.com and archived later in the day for replay.
About Chubb
     Founded in 1882, the Chubb Group of Insurance Companies provide property and casualty insurance for personal and commercial customers worldwide through 8,500 independent agents and brokers. Chubb’s global network includes branches and affiliates throughout North America, Europe, Latin America, Asia and Australia.
     Chubb’s Supplementary Investor Information Report has been posted on its Internet site at http://www.chubb.com.
     All financial results in this release and attachments are unaudited.
           
  For further information contact:   Investors:   Glenn A. Montgomery
(908) 903-2365
           
      Media:   Mark E. Greenberg
(908) 903-2682

 

5

Definitions of Key Terms
Operating Income
Operating income, a non-GAAP financial measure, is net income excluding after-tax realized investment gains and losses. Management uses operating income, among other measures, to evaluate its performance because the realization of investment gains and losses in any given period is largely discretionary as to timing and can fluctuate significantly, which could distort the analysis of trends.
Underwriting Income (Loss)
Management evaluates underwriting results separately from investment results. The underwriting operations consist of four separate business units: personal insurance, commercial insurance, specialty insurance and reinsurance assumed. Performance of the business units is measured based on statutory underwriting results. Statutory accounting principles applicable to property and casualty insurance companies differ in certain respects from generally accepted accounting principles (GAAP). Under statutory accounting principles, policy acquisition and other underwriting expenses are recognized immediately, not at the time premiums are earned. Statutory underwriting income (loss) is arrived at by reducing premiums earned by losses and loss expenses incurred and statutory underwriting expenses incurred.
Management uses underwriting results determined in accordance with GAAP, among other measures, to assess the overall performance of the underwriting operations. To convert statutory underwriting results to a GAAP basis, 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.

 

6

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, which are made pursuant to the safe harbor provisions of the PSLRA and include statements regarding management’s 2007 operating income per share guidance and related assumptions, are made based upon management’s current expectations and beliefs concerning trends and future developments and their potential effects on Chubb. These statements are not guarantees of future performance. Actual results may differ materially from those suggested by forward-looking statements as a result of risks and uncertainties, which include, among others, those discussed or identified from time to time in 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;
 
•   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 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;
 
  –   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;

 

7

•   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:
  –   claims and litigation arising out of stock option “backdating,” “spring loading” and other stock option 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;
 
  –   legislative or regulatory proposals or changes;
•   the effects of changes in market practices in the U.S. property and casualty insurance industry, in particular contingent commissions and loss mitigation and finite reinsurance arrangements, 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 and 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.
     Chubb assumes no obligation to update any forward-looking information set forth in this document, which speak as of the date hereof.

 

8

THE CHUBB CORPORATION
SUPPLEMENTARY FINANCIAL DATA
(Unaudited)
                                 
    Periods Ended June 30  
    Second Quarter     Six Months  
    2007     2006     2007     2006  
            (in millions)          
PROPERTY AND CASUALTY INSURANCE
                                
  Underwriting
                                
Net Premiums Written
   $ 3,058     $ 3,081     $ 5,925     $ 6,006  
Decrease (Increase) in Unearned Premiums
     (94 )     (111 )     24       (17 )
 
                        
Premiums Earned
     2,964       2,970       5,949       5,989  
 
                        
Losses and Loss Expenses
     1,572       1,679       3,152       3,297  
Operating Costs and Expenses
     905       876       1,775       1,726  
Increase in Deferred Policy Acquisition Costs
     (56 )     (37 )     (53 )     (29 )
Dividends to Policyholders
     3       8       8       15  
 
                        
 
                                
Underwriting Income
     540       444       1,067       980  
 
                        
 
                                
  Investments
                                
Investment Income Before Expenses
     396       368       788       725  
Investment Expenses
     6       10       17       19  
 
                        
 
                                
Investment Income
     390       358       771       706  
 
                        
 
                                
  Other Income
     1       1       4       6  
 
                        
 
                                
Property and Casualty Income
     931       803       1,842       1,692  
 
                                
CORPORATE AND OTHER
     (38 )     (11 )     (65 )     (54 )
 
                        
 
                                
CONSOLIDATED OPERATING INCOME BEFORE INCOME TAX
     893       792       1,777       1,638  
 
                                
Federal and Foreign Income Tax
     245       221       495       464  
 
                        
 
                                
CONSOLIDATED OPERATING INCOME
     648       571       1,282       1,174  
 
                                
REALIZED INVESTMENT GAINS AFTER INCOME TAX
     61       27       137       96  
 
                        
 
                                
CONSOLIDATED NET INCOME
   $ 709     $ 598     $ 1,419     $ 1,270  
 
                        
 
                                
PROPERTY AND CASUALTY INVESTMENT INCOME AFTER INCOME TAX
   $ 313     $ 288     $ 618     $ 567  
 
                        

 

9

                                 
    Periods Ended June 30  
    Second Quarter     Six Months  
    2007     2006     2007     2006  
OUTSTANDING SHARE DATA
(in millions)
                                
Average Common and Potentially Dilutive Shares
     405.7       424.1       410.0       424.1  
Actual Common Shares at End of Period
     393.3       410.8       393.3       410.8  
 
                                
DILUTED EARNINGS PER SHARE DATA
                                
Operating Income
   $ 1.60     $ 1.35     $ 3.13     $ 2.77  
Realized Investment Gains
     .15       .06       .33       .22  
 
                        
Net Income
   $ 1.75     $ 1.41     $ 3.46     $ 2.99  
 
                        
 
                                
Effect of Catastrophes
   $ (.18 )   $ (.12 )   $ (.30 )   $ (.12 )
 
                        
                         
    June 30     Dec. 31     June 30  
    2007     2006     2006  
BOOK VALUE PER COMMON SHARE
   $ 35.13     $ 33.71     $ 30.77  
 
                        
BOOK VALUE PER COMMON SHARE,
with Available-for-Sale Fixed Maturities at Amortized Cost
     35.61       33.38       31.41  
PROPERTY AND CASUALTY UNDERWRITING RATIOS
PERIODS ENDED JUNE 30
                                 
    Second Quarter     Six Months  
    2007     2006     2007     2006  
Losses and Loss Expenses to Premiums Earned
     53.1 %     56.7 %     53.1 %     55.2 %
Underwriting Expenses to Premiums Written
     29.6       28.5       30.0       28.8  
 
                        
 
                                
Combined Loss and Expense Ratio
     82.7 %     85.2 %     83.1 %     84.0 %
 
                        
 
                                
Effect of Catastrophes on Combined Loss and Expense Ratio
     3.9 %     2.7 %     3.2 %     1.4 %
PROPERTY AND CASUALTY LOSSES AND LOSS EXPENSES COMPONENTS
PERIODS ENDED JUNE 30
                                 
    Second Quarter     Six Months  
    2007     2006     2007     2006  
            (in millions)          
Paid Losses and Loss Expenses
   $ 1,319     $ 1,276     $ 2,779     $ 2,576  
Increase in Unpaid Losses and Loss Expenses
     253       403       373       721  
 
                        
 
                                
Total Losses and Loss Expenses
   $ 1,572     $ 1,679     $ 3,152     $ 3,297  
 
                        

 

10

PROPERTY AND CASUALTY PRODUCT MIX
                                         
    Net Premiums Written     Combined Loss and  
                    % Increase     Expense Ratios  
    2007     2006     (Decrease)     2007     2006  
    (in millions)                          
SIX MONTHS ENDED JUNE 30
                                        
 
                                        
Personal Insurance
                                        
Automobile
   $ 311     $ 337       (8 )%     88.8 %     87.9 %
Homeowners
     1,174       1,097       7       77.4       73.1  
Other
     330       292       13       93.3       91.6  
 
                                    
Total Personal
     1,815       1,726       5       82.3       79.1  
 
                                    
 
                                        
Commercial Insurance
                                        
Multiple Peril
     613       645       (5 )     85.0       75.4  
Casualty
     897       895       —       93.4       93.4  
Workers’ Compensation
     481       472       2       74.5       81.3  
Property and Marine
     626       607       3       88.4       73.2  
 
                                    
Total Commercial
     2,617       2,619       —       86.7       82.1  
 
                                    
 
                                        
Specialty Insurance
                                        
Professional Liability
     1,246       1,271       (2 )     84.8       93.7  
Surety
     178       148       20       32.0       48.0  
 
                                    
Total Specialty
     1,424       1,419       —       79.4       89.8  
 
                                    
 
                                        
Total Insurance
     5,856       5,764       2       83.5       83.3  
 
                                        
Reinsurance Assumed
     69       242       (71 )     *       *  
 
                                    
 
                                        
Total
   $ 5,925     $ 6,006       (1 )     83.1       84.0  
 
                                    
 
                                        
QUARTERS ENDED JUNE 30
                                        
 
                                        
Personal Insurance
                                        
Automobile
   $ 164     $ 182       (10 )%     82.3 %     85.9 %
Homeowners
     654       609       7       83.8       72.6  
Other
     157       143       10       93.8       92.6  
 
                                    
Total Personal
     975       934       4       85.3       78.5  
 
                                    
 
                                        
Commercial Insurance
                                        
Multiple Peril
     306       319       (4 )     86.7       80.4  
Casualty
     456       455       —       92.4       92.4  
Workers’ Compensation
     224       216       4       72.0       84.7  
Property and Marine
     325       304       7       83.7       80.9  
 
                                    
Total Commercial
     1,311       1,294       1       85.4       85.4  
 
                                    
 
                                        
Specialty Insurance
                                        
Professional Liability
     649       656       (1 )     80.5       92.0  
Surety
     94       83       13       32.7       58.7  
 
                                    
Total Specialty
     743       739       1       75.6       89.0  
 
                                    
 
                                        
Total Insurance
     3,029       2,967       2       82.9       84.4  
 
                                    
 
                                        
Reinsurance Assumed
     29       114       (75 )     *       *  
 
                                    
 
                                        
Total
   $ 3,058     $ 3,081       (1 )     82.7       85.2  
 
                                    
 
*   Combined loss and expense ratios are no longer presented for Reinsurance Assumed since this business is in run-off.
 
   

EX-99.2 3 y37396exv99w2.htm EX-99.2: SUPPLEMENTARY INVESTOR INFORMATION EX-99.2
 

Exhibit 99.2
         
The
Chubb
Corporation
  Supplementary
Investor
Information 		  June 30, 2007
     
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
JUNE 30, 2007
         
    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 — Year-To-Date
     6-10  
Underwriting Results — Quarterly
     11-15  
 
        
Definitions of Key Terms
     16  

 

 

THE CHUBB CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
                 
    June 30     Dec. 31  
    2007     2006  
    (in millions)  
Invested Assets (at carrying value)
                
Short Term Investments
   $ 2,632     $ 2,254  
Fixed Maturities
                
Tax Exempt
     18,087       17,748  
Taxable
     14,852       14,218  
Equity Securities
     2,285       1,957  
Other Invested Assets
     1,709       1,516  
 
            
Total Invested Assets
   $ 39,565     $ 37,693  
 
            
 
                
Unrealized Appreciation of Fixed Maturities Carried at Amortized Cost
   $ 6     $ 7  
 
            
 
                
Capitalization
                
Long Term Debt
   $ 4,135     $ 2,466  
Shareholders’ Equity
     13,818       13,863  
 
            
Total Capitalization
   $ 17,953     $ 16,329  
 
            
 
                
DEBT AS A PERCENTAGE OF TOTAL CAPITALIZATION
     23.0 %     15.1 %
 
                
Actual Common Shares Outstanding
     393.3       411.3  
 
                
Book Value Per Common Share
   $ 35.13     $ 33.71  
 
                
Book Value Per Common Share, with
Available-for-Sale Fixed Maturities at Amortized Cost
   $ 35.61     $ 33.38  

Page 1 of 16

 

THE CHUBB CORPORATION
SHARE REPURCHASE ACTIVITY
(dollars in millions, except per share amounts)
                         
    Periods Ended June 30    
    Second   Six   From
    Quarter   Months   December 2005
    2007   2007   to June 30, 2007
Cost of Shares Repurchased
     $535       $1,140       $2,532  
Average Cost Per Share
     $54.07       $52.46       $50.76  
Shares Repurchased
     9,891,000       21,726,577       49,880,639  
In December 2005, the Board of Directors authorized the repurchase of up to 28,000,000 shares of the Corporation’s common stock. No shares remain under the 2005 share repurchase authorization.
In December 2006, the Board of Directors authorized the repurchase of up to 20,000,000 shares of the Corporation’s common stock. In March 2007, the Board of Directors authorized an increase of 20,000,000 shares to the authorization approved in December 2006. The authorization has no expiration date. As of June 30, 2007, 18,119,361 shares remained under the share repurchase authorization.

Page 2 of 16

 

THE CHUBB CORPORATION
SUMMARY OF INVESTED ASSETS
CORPORATE
                                                 
    Cost or     Market     Carrying  
    Amortized Cost     Value     Value  
    June 30     Dec. 31     June 30     Dec. 31     June 30     Dec. 31  
    2007     2006     2007     2006     2007     2006  
    (in millions)  
Short Term Investments
   $ 1,731     $ 793     $ 1,731     $ 793     $ 1,731     $ 793  
Taxable Fixed Maturities
     1,109       1,160       1,077       1,138       1,077       1,138  
Equity Securities
     289       289       488       416       488       416  
 
                                    
TOTAL
   $ 3,129     $ 2,242     $ 3,296     $ 2,347     $ 3,296     $ 2,347  
 
                                    
PROPERTY AND CASUALTY
                                                 
    Cost or     Market     Carrying  
    Amortized Cost     Value     Value  
    June 30     Dec. 31     June 30     Dec. 31     June 30     Dec. 31  
    2007     2006     2007     2006     2007     2006  
    (in millions)  
Short Term Investments
   $ 901     $ 1,461     $ 901     $ 1,461     $ 901     $ 1,461  
Fixed Maturities
                                                
Tax Exempt
     18,091       17,449       18,093       17,755       18,087       17,748  
Taxable
     14,029       13,150       13,775       13,080       13,775       13,080  
Common Stocks
     1,419       1,235       1,767       1,502       1,767       1,502  
Preferred Stocks
     28       37       30       39       30       39  
Other Invested Assets
     1,709       1,516       1,709       1,516       1,709       1,516  
 
                                    
TOTAL
   $ 36,177     $ 34,848     $ 36,275     $ 35,353     $ 36,269     $ 35,346  
 
                                    

Page 3 of 16

 

THE CHUBB CORPORATION
INVESTMENT INCOME AFTER TAXES
                                 
    PERIODS ENDED JUNE 30  
    SECOND QUARTER     SIX MONTHS  
    2007     2006     2007     2006  
    (in millions)  
CORPORATE INVESTMENT INCOME
   $ 22     $ 16     $ 36     $ 31  
 
                        
 
                                
PROPERTY AND CASUALTY INVESTMENT INCOME
                                
Tax Exempt Interest
   $ 182     $ 169     $ 360     $ 333  
Taxable Interest
     115       110       233       221  
Other
     20       16       36       26  
Investment Expenses
     (4 )     (7 )     (11 )     (13 )
 
                        
TOTAL
   $ 313     $ 288     $ 618     $ 567  
 
                        
 
                                
Effective Tax Rate
     19.7 %     19.6 %     19.8 %     19.7 %
After Tax Annualized Yield
     3.46 %     3.48 %     3.45 %     3.47 %
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
                         
    June 30   Dec. 31   June 30
    2007   2006   2006
    (in millions)
Estimated Statutory Policyholders’ Surplus
   $ 12,250     $ 11,357     $ 10,000  
 
                        
Rolling Year Statutory Net Premiums Written
     11,873       11,967       12,096  
 
                        
Ratio of Statutory Net Premiums Written to Policyholders’ Surplus
     0.97:1       1.05:1       1.21:1  
Statutory Policyholders’ Surplus and Net Premiums Written include all domestic and foreign property and casualty subsidiaries.

Page 4 of 16

 

THE CHUBB CORPORATION
PROPERTY AND CASUALTY
CHANGE IN NET UNPAID LOSSES
SIX MONTHS ENDED JUNE 30, 2007
                                         
                                    All Other  
    Net Unpaid Losses     IBNR     Unpaid Losses  
                    Increase     Increase     Increase  
    6/30/07     12/31/06     (Decrease)     (Decrease)     (Decrease)  
    (in millions)  
Personal Insurance
                                        
 
                                        
Automobile
   $ 417     $ 425     $ (8 )   $ 4     $ (12 )
Homeowners
     665       665       —       5       (5 )
Other
     709       657       52       61       (9 )
 
                              
Total Personal
     1,791       1,747       44       70       (26 )
 
                              
 
                                        
Commercial Insurance
                                        
 
                                        
Multiple Peril
     1,608       1,593       15       38       (23 )
Casualty
     5,392       5,213       179       142       37  
Workers’ Compensation
     1,803       1,740       63       58       5  
Property and Marine
     717       678       39       14       25  
 
                              
Total Commercial
     9,520       9,224       296       252       44  
 
                              
 
                                        
Specialty Insurance
                                        
 
                                        
Professional Liability
     7,437       7,288       149       372       (223 )
Surety
     58       59       (1 )     —       (1 )
 
                              
Total Specialty
     7,495       7,347       148       372       (224 )
 
                              
Total Insurance
     18,806       18,318       488       694       (206 )
 
                                        
Reinsurance Assumed
     1,266       1,381       (115 )     (74 )     (41 )
 
                              
 
                                        
Total
   $ 20,072     $ 19,699     $ 373     $ 620     $ (247 )
 
                              

Page 5 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006
(MILLIONS OF DOLLARS)
                                                                 
    Personal                     Other     Total  
    Automobile     Homeowners     Personal     Personal  
    2007     2006     2007     2006     2007     2006     2007     2006  
Net Premiums Written
   $ 311     $ 337     $ 1,174     $ 1,097     $ 330     $ 292     $ 1,815     $ 1,726  
Increase (Decrease) in Unearned Premiums
     (18 )     7       15       24       21       14       18       45  
 
                                                
 
                                                                
Net Premiums Earned
     329       330       1,159       1,073       309       278       1,797       1,681  
 
                                                
 
                                                                
Net Losses Paid
     206       192       529       502       138       154       873       848  
Increase (Decrease) in Outstanding Losses
     (8 )     5       —       (53 )     52       16       44       (32 )
 
                                                
 
                                                                
Net Losses Incurred
     198       197       529       449       190       170       917       816  
 
                                                
 
                                                                
Expenses Incurred
     89       95       373       343       105       89       567       527  
 
                                                                
Dividends Incurred
     —       —       —       —       —       —       —       —  
 
                                                
 
                                                                
Statutory Underwriting Income
   $ 42     $ 38     $ 257     $ 281     $ 14     $ 19     $ 313     $ 338  
 
                                                
 
                                                                
Ratios After Dividends to Policyholders:
                                                                
 
                                                                
Loss
     60.2 %     59.7 %     45.6 %     41.8 %     61.5 %     61.1 %     51.1 %     48.6 %
Expense
     28.6       28.2       31.8       31.3       31.8       30.5       31.2       30.5  
 
                                                
 
                                                                
Combined
     88.8 %     87.9 %     77.4 %     73.1 %     93.3 %     91.6 %     82.3 %     79.1 %
 
                                                
 
                                                                
Premiums Written as a % of Total
     5.2 %     5.6 %     19.8 %     18.3 %     5.6 %     4.9 %     30.6 %     28.8 %

Page 6 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006
(MILLIONS OF DOLLARS)
                                                                                 
                                    Commercial     Commercial        
    Commercial     Commercial     Workers'     Property     Total  
    Multiple Peril     Casualty     Compensation     and Marine     Commercial  
    2007     2006     2007     2006     2007     2006     2007     2006     2007     2006  
Net Premiums Written
   $ 613     $ 645     $ 897     $ 895     $ 481     $ 472     $ 626     $ 607     $ 2,617     $ 2,619  
Increase (Decrease) in Unearned Premiums
     (20 )     (4 )     33       28       23       21       23       40       59       85  
 
                                                            
 
                                                                                
Net Premiums Earned
     633       649       864       867       458       451       603       567       2,558       2,534  
 
                                                            
 
                                                                                
Net Losses Paid
     300       237       386       361       173       174       280       275       1,139       1,047  
Increase (Decrease) in Outstanding Losses
     15       39       179       219       63       86       39       (44 )     296       300  
 
                                                            
 
                                                                                
Net Losses Incurred
     315       276       565       580       236       260       319       231       1,435       1,347  
 
                                                            
 
                                                                                
Expenses Incurred
     216       212       251       237       105       100       222       197       794       746  
 
                                                                                
Dividends Incurred
     —       —       —       —       7       14       —       —       7       14  
 
                                                            
 
                                                                                
Statutory Underwriting Income
   $ 102     $ 161     $ 48     $ 50     $ 110     $ 77     $ 62     $ 139     $ 322     $ 427  
 
                                                            
 
                                                                                
Ratios After Dividends to Policyholders:
                                                                                
 
                                                                                
Loss
     49.8 %     42.5 %     65.4 %     66.9 %     52.3 %     59.5 %     52.9 %     40.7 %     56.3 %     53.5 %
Expense
     35.2       32.9       28.0       26.5       22.2       21.8       35.5       32.5       30.4       28.6  
 
                                                            
 
                                                                                
Combined
     85.0 %     75.4 %     93.4 %     93.4 %     74.5 %     81.3 %     88.4 %     73.2 %     86.7 %     82.1 %
 
                                                            
 
                                                                                
Premiums Written as a % of Total
     10.3 %     10.7 %     15.1 %     14.9 %     8.2 %     7.9 %     10.6 %     10.1 %     44.2 %     43.6 %

Page 7 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006
(MILLIONS OF DOLLARS)
                                                 
    Professional                     Total  
    Liability     Surety     Specialty  
    2007     2006     2007     2006     2007     2006  
Net Premiums Written
   $ 1,246     $ 1,271     $ 178     $ 148     $ 1,424     $ 1,419  
Increase (Decrease) in Unearned Premiums
     (74 )     (87 )     24       15       (50 )     (72 )
 
                                    
 
                                                
Net Premiums Earned
     1,320       1,358       154       133       1,474       1,491  
 
                                    
 
                                                
Net Losses Paid
     636       513       5       7       641       520  
Increase (Decrease) in Outstanding Losses
     149       433       (1 )     15       148       448  
 
                                    
 
                                                
Net Losses Incurred
     785       946       4       22       789       968  
 
                                    
 
                                                
Expenses Incurred
     315       306       52       46       367       352  
 
                                                
Dividends Incurred
     —       —       1       1       1       1  
 
                                    
 
                                                
Statutory Underwriting Income
   $ 220     $ 106     $ 97     $ 64     $ 317     $ 170  
 
                                    
 
                                                
Ratios After Dividends to Policyholders:
                                                
 
                                                
Loss
     59.5 %     69.6 %     2.6 %     16.7 %     53.6 %     65.0 %
Expense
     25.3       24.1       29.4       31.3       25.8       24.8  
 
                                    
 
                                                
Combined
     84.8 %     93.7 %     32.0 %     48.0 %     79.4 %     89.8 %
 
                                    
 
                                                
Premiums Written as a % of Total
     21.0 %     21.1 %     3.0 %     2.5 %     24.0 %     23.6 %

Page 8 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006
(MILLIONS OF DOLLARS)
                                                 
    Total     Reinsurance     Worldwide  
    Insurance     Assumed     Total  
    2007     2006     2007     2006     2007     2006  
Net Premiums Written
   $ 5,856     $ 5,764     $ 69     $ 242     $ 5,925     $ 6,006  
Increase (Decrease) in Unearned Premiums
     27       58       (51 )     (41 )     (24 )     17  
 
                                    
 
                                                
Net Premiums Earned
     5,829       5,706       120       283       5,949       5,989  
 
                                    
 
                                                
Net Losses Paid
     2,653       2,415       126       161       2,779       2,576  
Increase (Decrease) in Outstanding Losses
     488       716       (115 )     5       373       721  
 
                                    
 
                                                
Net Losses Incurred
     3,141       3,131       11       166       3,152       3,297  
 
                                    
 
                                                
Expenses Incurred
     1,728       1,625       47       101       1,775       1,726  
 
                                                
Dividends Incurred
     8       15       —       —       8       15  
 
                                    
 
                                                
Statutory Underwriting Income
   $ 952     $ 935     $ 62     $ 16       1,014       951  
 
                                        
 
                                                
Increase in Deferred Acquisition Costs
                                     53       29  
 
                                            
 
                                                
GAAP Underwriting Income
                                   $ 1,067     $ 980  
 
                                            
 
                                                
Ratios After Dividends to Policyholders:
                                                
 
                                                
Loss
     54.0 %     55.0 %     * %     * %     53.1 %     55.2 %
Expense
     29.5       28.3       *       *       30.0       28.8  
 
                                    
 
                                                
Combined
     83.5 %     83.3 %     * %     * %     83.1 %     84.0 %
 
                                    
 
                                                
Premiums Written as a % of Total
     98.8 %     96.0 %     1.2 %     4.0 %     100.0 %     100.0 %
 
*   Combined, loss, and expense ratios are no longer presented for Reinsurance Assumed since this business is in run-off.

Page 9 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006
(MILLIONS OF DOLLARS)
                                                 
                                    Worldwide  
    United States     Foreign     Total  
    2007     2006     2007     2006     2007     2006  
Net Premiums Written
   $ 4,592     $ 4,758     $ 1,333     $ 1,248     $ 5,925     $ 6,006  
Increase (Decrease) in Unearned Premiums
     (76 )     (59 )     52       76       (24 )     17  
 
                                    
 
                                                
Net Premiums Earned
     4,668       4,817       1,281       1,172       5,949       5,989  
 
                                    
 
                                                
Net Losses Paid
     2,339       2,218       440       358       2,779       2,576  
Increase (Decrease) in Outstanding Losses
     153       447       220       274       373       721  
 
                                    
 
                                                
Net Losses Incurred
     2,492       2,665       660       632       3,152       3,297  
 
                                    
 
                                                
Expenses Incurred
     1,307       1,304       468       422       1,775       1,726  
 
                                                
Dividends Incurred
     8       15       —       —       8       15  
 
                                    
 
                                                
Statutory Underwriting Income
   $ 861     $ 833     $ 153     $ 118       1,014       951  
 
                                        
 
                                                
Increase in Deferred Acquisition Costs
                                     53       29  
 
                                            
 
                                                
GAAP Underwriting Income
                                   $ 1,067     $ 980  
 
                                            
 
                                                
Ratios After Dividends to Policyholders:
                                                
 
                                                
Loss
     53.5 %     55.5 %     51.5 %     53.9 %     53.1 %     55.2 %
Expense
     28.5       27.5       35.1       33.8       30.0       28.8  
 
                                    
 
                                                
Combined
     82.0 %     83.0 %     86.6 %     87.7 %     83.1 %     84.0 %
 
                                    
 
                                                
Premiums Written as a % of Total
     77.5 %     79.2 %     22.5 %     20.8 %     100.0 %     100.0 %

Page 10 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2007 AND 2006
(MILLIONS OF DOLLARS)
                                                                 
    Personal                     Other     Total  
    Automobile     Homeowners     Personal     Personal  
    2007     2006     2007     2006     2007     2006     2007     2006  
Net Premiums Written
   $ 164     $ 182     $ 654     $ 609     $ 157     $ 143     $ 975     $ 934  
Increase (Decrease) in Unearned Premiums
     —       16       70       70       2       4       72       90  
 
                                                
 
                                                                
Net Premiums Earned
     164       166       584       539       155       139       903       844  
 
                                                
 
                                                                
Net Losses Paid
     96       94       286       266       58       67       440       427  
Increase (Decrease) in Outstanding Losses
     (6 )     2       23       (40 )     35       18       52       (20 )
 
                                                
 
                                                                
Net Losses Incurred
     90       96       309       226       93       85       492       407  
 
                                                
 
                                                                
Expenses Incurred
     45       51       202       187       53       45       300       283  
 
                                                                
Dividends Incurred
     —       —       —       —       —       —       —       —  
 
                                                
 
                                                                
Statutory Underwriting Income (Loss)
   $ 29     $ 19     $ 73     $ 126     $ 9     $ 9     $ 111     $ 154  
 
                                                
 
                                                                
Ratios After Dividends to Policyholders:
                                                                
 
                                                                
Loss
     54.9 %     57.9 %     52.9 %     41.9 %     60.0 %     61.1 %     54.5 %     48.2 %
Expense
     27.4       28.0       30.9       30.7       33.8       31.5       30.8       30.3  
 
                                                
 
                                                                
Combined
     82.3 %     85.9 %     83.8 %     72.6 %     93.8 %     92.6 %     85.3 %     78.5 %
 
                                                
 
                                                                
Premiums Written as a % of Total
     5.4 %     5.9 %     21.4 %     19.8 %     5.1 %     4.6 %     31.9 %     30.3 %

Page 11 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2007 AND 2006
(MILLIONS OF DOLLARS)
                                                                                 
                                    Commercial     Commercial        
    Commercial     Commercial     Workers’     Property     Total  
    Multiple Peril     Casualty     Compensation     and Marine     Commercial  
    2007     2006     2007     2006     2007     2006     2007     2006     2007     2006  
Net Premiums Written
   $ 306     $ 319     $ 456     $ 455     $ 224     $ 216     $ 325     $ 304     $ 1,311     $ 1,294  
Increase (Decrease) in Unearned Premiums
     (7 )     (3 )     21       23       (6 )     (5 )     22       24       30       39  
 
                                                            
 
                                                                                
Net Premiums Earned
     313       322       435       432       230       221       303       280       1,281       1,255  
 
                                                            
 
                                                                                
Net Losses Paid
     140       108       156       170       87       92       135       125       518       495  
Increase (Decrease) in Outstanding Losses
     20       42       124       120       22       37       15       13       181       212  
 
                                                            
 
                                                                                
Net Losses Incurred
     160       150       280       290       109       129       150       138       699       707  
 
                                                            
 
                                                                                
Expenses Incurred
     109       108       128       115       53       51       111       96       401       370  
 
                                                                                
Dividends Incurred
     —       —       —       —       3       7       —       —       3       7  
 
                                                            
 
                                                                                
Statutory Underwriting Income (Loss)
   $ 44     $ 64     $ 27     $ 27     $ 65     $ 34     $ 42     $ 46     $ 178     $ 171  
 
                                                            
 
                                                                                
Ratios After Dividends to Policyholders:
                                                                                
 
                                                                                
Loss
     51.1 %     46.6 %     64.4 %     67.1 %     48.0 %     60.3 %     49.5 %     49.3 %     54.7 %     56.7 %
Expense
     35.6       33.8       28.0       25.3       24.0       24.4       34.2       31.6       30.7       28.7  
 
                                                            
 
                                                                                
Combined
     86.7 %     80.4 %     92.4 %     92.4 %     72.0 %     84.7 %     83.7 %     80.9 %     85.4 %     85.4 %
 
                                                            
 
                                                                                
Premiums Written as a % of Total
     10.0 %     10.3 %     14.9 %     14.8 %     7.3 %     7.0 %     10.7 %     9.9 %     42.9 %     42.0 %

Page 12 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2007 AND 2006
(MILLIONS OF DOLLARS)
                                                 
    Professional                     Total  
    Liability     Surety     Specialty  
    2007     2006     2007     2006     2007     2006  
Net Premiums Written
   $ 649     $ 656     $ 94     $ 83     $ 743     $ 739  
Increase (Decrease) in Unearned Premiums
     (8 )     (17 )     18       14       10       (3 )
 
                                    
 
                                                
Net Premiums Earned
     657       673       76       69       733       742  
 
                                    
 
                                                
Net Losses Paid
     282       277       4       8       286       285  
Increase (Decrease) in Outstanding Losses
     86       189       (1 )     12       85       201  
 
                                    
 
                                                
Net Losses Incurred
     368       466       3       20       371       486  
 
                                    
 
                                                
Expenses Incurred
     159       149       27       24       186       173  
 
                                                
Dividends Incurred
     —       —       —       1       —       1  
 
                                    
 
                                                
Statutory Underwriting Income (Loss)
   $ 130     $ 58     $ 46     $ 24     $ 176     $ 82  
 
                                    
 
                                                
Ratios After Dividends to Policyholders:
                                                
 
                                                
Loss
     56.0 %     69.3 %     4.0 %     29.4 %     50.6 %     65.6 %
Expense
     24.5       22.7       28.7       29.3       25.0       23.4  
 
                                    
 
                                                
Combined
     80.5 %     92.0 %     32.7 %     58.7 %     75.6 %     89.0 %
 
                                    
 
                                                
Premiums Written as a % of Total
     21.2 %     21.3 %     3.1 %     2.7 %     24.3 %     24.0 %

Page 13 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2007 AND 2006
(MILLIONS OF DOLLARS)
                                                 
    Total     Reinsurance     Worldwide  
    Insurance     Assumed     Total  
    2007     2006     2007     2006     2007     2006  
Net Premiums Written
   $ 3,029     $ 2,967     $ 29     $ 114     $ 3,058     $ 3,081  
Increase (Decrease) in Unearned Premiums
     112       126       (18 )     (15 )     94       111  
 
                                    
 
                                                
Net Premiums Earned
     2,917       2,841       47       129       2,964       2,970  
 
                                    
 
                                                
Net Losses Paid
     1,244       1,207       75       69       1,319       1,276  
Increase (Decrease) in Outstanding Losses
     318       393       (65 )     10       253       403  
 
                                    
 
                                                
Net Losses Incurred
     1,562       1,600       10       79       1,572       1,679  
 
                                    
 
                                                
Expenses Incurred
     887       826       18       50       905       876  
 
                                                
Dividends Incurred
     3       8       —       —       3       8  
 
                                    
 
                                                
Statutory Underwriting Income (Loss)
   $ 465     $ 407     $ 19     $ —     $ 484     $ 407  
 
                                    
 
                                                
Increase in Deferred Acquisition Costs
                                     56       37  
 
                                            
 
                                                
GAAP Underwriting Income
                                   $ 540     $ 444  
 
                                            
 
                                                
Ratios After Dividends to Policyholders:
                                                
 
                                                
Loss
     53.6 %     56.5 %     * %     * %     53.1 %     56.7 %
Expense
     29.3       27.9       *       *       29.6       28.5  
 
                                    
 
                                                
Combined
     82.9 %     84.4 %     * %     * %     82.7 %     85.2 %
 
                                    
 
                                                
Premiums Written as a % of Total
     99.1 %     96.3 %     0.9 %     3.7 %     100.0 %     100.0 %
 
*   Combined, loss, and expense ratios are no longer presented for Reinsurance Assumed since this business is in run-off.

Page 14 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2007 AND 2006
(MILLIONS OF DOLLARS)
                                                 
                                    Worldwide  
    United States     Foreign     Total  
    2007     2006     2007     2006     2007     2006  
Net Premiums Written
   $ 2,426     $ 2,490     $ 632     $ 591     $ 3,058     $ 3,081  
Increase (Decrease) in Unearned Premiums
     107       117       (13 )     (6 )     94       111  
 
                                    
 
                                                
Net Premiums Earned
     2,319       2,373       645       597       2,964       2,970  
 
                                    
 
                                                
Net Losses Paid
     1,172       1,125       147       151       1,319       1,276  
Increase (Decrease) in Outstanding Losses
     40       210       213       193       253       403  
 
                                    
 
                                                
Net Losses Incurred
     1,212       1,335       360       344       1,572       1,679  
 
                                    
 
                                                
Expenses Incurred
     684       683       221       193       905       876  
 
                                                
Dividends Incurred
     3       8       —       —       3       8  
 
                                    
 
                                                
Statutory Underwriting Income (Loss)
   $ 420     $ 347     $ 64     $ 60       484       407  
 
                                    
 
                                                
Increase in Deferred Acquisition Costs
                                     56       37  
 
                                            
 
                                                
GAAP Underwriting Income
                                   $ 540     $ 444  
 
                                            
 
                                                
Ratios After Dividends to Policyholders:
                                                
 
                                                
Loss
     52.3 %     56.4 %     55.8 %     57.6 %     53.1 %     56.7 %
Expense
     28.2       27.5       35.0       32.7       29.6       28.5  
 
                                    
 
                                                
Combined
     80.5 %     83.9 %     90.8 %     90.3 %     82.7 %     85.2 %
 
                                    
 
                                                
Premiums Written as a % of Total
     79.3 %     80.8 %     20.7 %     19.2 %     100.0 %     100.0 %

Page 15 of 16

 

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 16 of 16

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