EX-99.2 3 y79847exv99w2.htm EX-99.2 exv99w2
Exhibit 99.2
 
The
Chubb
Corporation		   Supplementary
Investor
Information		   September 30, 2009
     
This report is for informational purposes only. It should be read in conjunction with documents filed by The Chubb Corporation with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.   (CHUBB LOGO)

 

 

THE CHUBB CORPORATION
SUPPLEMENTARY INVESTOR INFORMATION
TABLE OF CONTENTS
SEPTEMBER 30, 2009
     
    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
   16-17

 

 

THE CHUBB CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(in millions, except per share amounts)
                                 
    Sept. 30     Dec. 31  
    2009     2008  
            % of Total             % of Total  
Invested Assets (at carrying value)
                                
Short Term Investments
   $ 2,587       6 %   $ 2,478       7 %
Fixed Maturities
                                
Tax Exempt
     19,758       47       18,345       47  
Taxable
     16,510       39       14,410       37  
Equity Securities
     1,353       3       1,479       4  
Other Invested Assets
     1,838       5       2,026       5  
 
                        
Total Invested Assets
   $ 42,046       100 %   $ 38,738       100 %
 
                        
 
                                
Unrealized Appreciation (Depreciation) of Investments
                                
Fixed Maturities
   $ 1,639             $ (136 )        
Equity Securities
     129               (84 )        
 
                            
 
     1,768               (220 )        
Deferred Income Tax Liability (Asset)
     619               (77 )        
 
                            
 
   $ 1,149             $ (143 )        
 
                            
 
                                
Capitalization
                                
Long Term Debt
   $ 3,975             $ 3,975          
Shareholders’ Equity
     15,518               13,432          
 
                            
Total Capitalization
   $ 19,493             $ 17,407          
 
                            
 
                                
Debt as a Percentage of Total Capitalization
     20.4 %             22.8 %        
 
                                
Actual Common Shares Outstanding
     341.6               352.3          
 
                                
Book Value Per Common Share
   $ 45.43             $ 38.13          
 
                                
Book Value Per Common Share, with Available-for-Sale Fixed Maturities at Amortized Cost
   $ 42.31             $ 38.38          

Page 1 of 17

 

THE CHUBB CORPORATION
SHARE REPURCHASE ACTIVITY
(dollars in millions, except per share amounts)
                         
    Periods Ended September 30        
    Third     Nine     From  
    Quarter     Months     December 2005  
    2009     2009     to September 30, 2009  
 
                        
Cost of Shares Repurchased
   $412     $576     $5,463  
Average Cost Per Share
   $47.57     $45.11     $50.12  
Shares Repurchased
     8,666,502       12,781,031       108,997,131  
In December 2005 and December 2006, the Board of Directors authorized the repurchase of up to 28,000,000 shares and 20,000,000 shares, respectively, 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 2006. In December 2007, the Board of Directors authorized the repurchase of up to 28,000,000 shares of the Corporation’s common stock. No shares remain under these share repurchase authorizations.
In December 2008, the Board of Directors authorized the repurchase of up to 20,000,000 shares of the Corporation’s common stock. The authorization has no expiration date. As of September 30, 2009, 7,002,869 shares remained under the share repurchase authorization.

Page 2 of 17

 

THE CHUBB CORPORATION
SUMMARY OF INVESTED ASSETS
CORPORATE
                                 
    Cost or Amortized Cost     Carrying Value (a)  
    Sept. 30     Dec. 31     Sept. 30     Dec. 31  
    2009     2008     2009     2008  
    (in millions)  
Short Term Investments
   $ 1,181     $ 1,602     $ 1,181     $ 1,602  
Taxable Fixed Maturities
     1,302       774       1,350       780  
Equity Securities
     205       451       194       504  
 
                        
TOTAL
   $ 2,688     $ 2,827     $ 2,725     $ 2,886  
 
                        
PROPERTY AND CASUALTY
                                 
    Cost or Amortized Cost     Carrying Value (a)  
    Sept. 30     Dec. 31     Sept. 30     Dec. 31  
    2009     2008     2009     2008  
    (in millions)  
Short Term Investments
   $ 1,406     $ 876     $ 1,406     $ 876  
Fixed Maturities
                               
Tax Exempt
     18,672       18,299       19,758       18,345  
Taxable
     14,655       13,818       15,160       13,630  
Equity Securities
     1,019       1,112       1,159       975  
Other Invested Assets
     1,838       2,026       1,838       2,026  
 
                        
TOTAL
   $ 37,590     $ 36,131     $ 39,321     $ 35,852  
 
                        
 
(a)   Short term investments are carried at amortized cost, which approximates fair value. Fixed maturities and equity securities are carried at fair value. Other invested assets, which include private equity limited partnerships, are carried at Chubb’s equity in the net assets of the partnerships.

Page 3 of 17

 

THE CHUBB CORPORATION
INVESTMENT INCOME AFTER TAXES
                                 
    Periods Ended September 30  
    Third Quarter     Nine Months  
    2009     2008     2009     2008  
    (in millions)  
CORPORATE INVESTMENT INCOME
   $ 9     $ 13     $ 27     $ 39  
 
                        
PROPERTY AND CASUALTY INVESTMENT INCOME
                                
Tax Exempt Interest
   $ 190     $ 185     $ 563     $ 554  
Taxable Interest
     118       125       346       379  
Other
     16       21       42       62  
Investment Expenses
     (7 )     (4 )     (16 )     (14 )
 
                        
TOTAL
   $ 317     $ 327     $ 935     $ 981  
 
                        
Effective Tax Rate
     18.7 %     20.4 %     19.1 %     20.3 %
After-Tax Annualized Yield
     3.39 %     3.48 %     3.40 %     3.49 %
After-tax annualized yield is based on the average invested assets for the periods presented, with fixed maturities at amortized cost and equity securities at fair value.
STATUTORY POLICYHOLDERS’ SURPLUS
                         
    Sept. 30   Dec. 31   Sept. 30
    2009   2008   2008
    (in millions)
Estimated Statutory Policyholders’ Surplus
   $ 13,650     $ 12,281     $ 12,750  
Rolling Year Statutory Net Premiums Written
   $ 11,180     $ 11,759     $ 11,866  
Ratio of Statutory Net Premiums Written to Policyholders’ Surplus
     0.82:1       0.96:1       0.93:1  
Statutory Policyholders’ Surplus and Net Premiums Written include all domestic and foreign property and casualty subsidiaries.

Page 4 of 17

 

THE CHUBB CORPORATION
PROPERTY AND CASUALTY
CHANGE IN NET UNPAID LOSSES
NINE MONTHS ENDED SEPTEMBER 30, 2009
                                         
    Net Unpaid Losses                  
                All Other  
        IBNR     Unpaid Losses  
                    Increase     Increase     Increase  
    9/30/09     12/31/08     (Decrease)     (Decrease)     (Decrease)  
    (in millions)  
Personal Insurance
                                        
Automobile
   $ 397     $ 391     $ 6     $ (13 )   $ 19  
Homeowners
     673       715       (42 )     (8 )     (34 )
Other
     874       815       59       58       1  
 
                              
Total Personal
     1,944       1,921       23       37       (14 )
 
                              
 
Commercial Insurance
                                        
Multiple Peril
     1,619       1,586       33       35       (2 )
Casualty
     5,931       5,660       271       153       118  
Workers’ Compensation
     2,109       1,982       127       67       60  
Property and Marine
     792       839       (47 )     (3 )     (44 )
 
                              
Total Commercial
     10,451       10,067       384       252       132  
 
                              
 
Specialty Insurance
                                        
Professional Liability
     7,516       7,175       341       363       (22 )
Surety
     61       68       (7 )     (1 )     (6 )
 
                              
Total Specialty
     7,577       7,243       334       362       (28 )
 
                              
Total Insurance
     19,972       19,231       741       651       90  
 
Reinsurance Assumed
     788       924       (136 )     (83 )     (53 )
 
                              
Total
   $ 20,760     $ 20,155     $ 605     $ 568     $ 37  
 
                              

Page 5 of 17

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(DOLLARS IN MILLIONS)
                                                                 
    Personal                     Other     Total  
    Automobile     Homeowners     Personal     Personal  
    2009     2008     2009     2008     2009     2008     2009     2008  
Net Premiums Written
   $ 428     $ 457     $ 1,771     $ 1,859     $ 551     $ 571     $ 2,750     $ 2,887  
Decrease (Increase) in Unearned Premiums
     1       8       8       (33 )     (5 )     (25 )     4       (50 )
 
                                                
Net Premiums Earned
     429       465       1,779       1,826       546       546       2,754       2,837  
 
                                                
Net Losses Paid
     256       279       929       845       283       287       1,468       1,411  
Increase (Decrease) in Outstanding Losses
     2       (3 )     (53 )     132       50       84       (1 )     213  
 
                                                
Net Losses Incurred
     258       276       876       977       333       371       1,467       1,624  
 
                                                
Expenses Incurred
     124       133       579       601       175       186       878       920  
Dividends Incurred
     —       —       —       —       —       —       —       —  
 
                                                
Statutory Underwriting Income (Loss)
   $ 47     $ 56     $ 324     $ 248     $ 38     $ (11 )   $ 409     $ 293  
 
                                                
Ratios After Dividends to Policyholders:
                                                                
Loss
     60.1 %     59.4 %     49.2 %     53.5 %     61.0 %     67.9 %     53.3 %     57.2 %
Expense
     29.0       29.1       32.7       32.3       31.8       32.6       31.9       31.9  
 
                                                
Combined
     89.1 %     88.5 %     81.9 %     85.8 %     92.8 %     100.5 %     85.2 %     89.1 %
 
                                                
Premiums Written as a % of Total
     5.2 %     5.2 %     21.4 %     20.9 %     6.6 %     6.4 %     33.2 %     32.5 %

Page 6 of 17

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(DOLLARS IN MILLIONS)
                                                                                 
                                    Commercial     Commercial        
    Commercial     Commercial     Workers’     Property     Total  
    Multiple Peril     Casualty     Compensation     and Marine     Commercial  
    2009     2008     2009     2008     2009     2008     2009     2008     2009     2008  
Net Premiums Written
   $ 835     $ 915     $ 1,161     $ 1,281     $ 610     $ 666     $ 953     $ 957     $ 3,559     $ 3,819  
Decrease (Increase) in Unearned Premiums
     33       21       21       3       (7 )     (9 )     (21 )     (33 )     26       (18 )
 
                                                            
Net Premiums Earned
     868       936       1,182       1,284       603       657       932       924       3,585       3,801  
 
                                                            
Net Losses Paid
     409       422       605       596       280       277       527       501       1,821       1,796  
Increase (Decrease) in Outstanding Losses
     15       61       195       256       116       81       (58 )     253       268       651  
 
                                                            
Net Losses Incurred
     424       483       800       852       396       358     469       754       2,089       2,447  
 
                                                            
Expenses Incurred
     306       324       333       362       142       152       330       329       1,111       1,167  
Dividends Incurred
     —       —       —       —       17       26       —       —       17       26  
 
                                                            
Statutory Underwriting Income (Loss)
   $ 138     $ 129     $ 49     $ 70     $ 48     $ 121     $ 133     $ (159 )   $ 368     $ 161  
 
                                                            
Ratios After Dividends to Policyholders:
                                                                                
Loss
     48.9 %     51.6 %     67.7 %     66.3 %     67.6 %     56.7 %     50.3 %     81.6 %     58.5 %     64.8 %
Expense
     36.6       35.4       28.7       28.3       23.9       23.8       34.7       34.4       31.4       30.8  
 
                                                            
Combined
     85.5 %     87.0 %     96.4 %     94.6 %     91.5 %     80.5 %     85.0 %     116.0 %     89.9 %     95.6 %
 
                                                            
Premiums Written as a % of Total
     10.1 %     10.3 %     14.0 %     14.4 %     7.3 %     7.5 %     11.5 %     10.8 %     42.9 %     43.0 %

Page 7 of 17

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(DOLLARS IN MILLIONS)
                                                 
    Professional                     Total  
    Liability     Surety     Specialty  
    2009     2008     2009     2008     2009     2008  
Net Premiums Written
   $ 1,725     $ 1,847     $ 243     $ 276     $ 1,968     $ 2,123  
Decrease (Increase) in Unearned Premiums
     134       120       8       (24 )     142       96  
 
                                    
Net Premiums Earned
     1,859       1,967       251       252       2,110       2,219  
 
                                    
Net Losses Paid
     998       1,167       14       40       1,012       1,207  
Increase (Decrease) in Outstanding Losses
     182       (18 )     (7 )     72       175       54  
 
                                    
Net Losses Incurred
     1,180       1,149       7       112       1,187       1,261  
 
                                    
Expenses Incurred
     465       472       80       85       545       557  
Dividends Incurred
     —       —       5       3       5       3  
 
                                    
Statutory Underwriting Income (Loss)
   $ 214     $ 346     $ 159     $ 52     $ 373     $ 398  
 
                                    
Ratios After Dividends to Policyholders:
                                                
Loss
     63.4 %     58.4 %     2.9 %     45.0 %     56.4 %     56.9 %
Expense
     27.0       25.6       33.6       31.1       27.8       26.3  
 
                                    
Combined
     90.4 %     84.0 %     36.5 %     76.1 %     84.2 %     83.2 %
 
                                    
Premiums Written as a % of Total
     20.8 %     20.8 %     2.9 %     3.1 %     23.7 %     23.9 %
Page 8 of 17

 

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(DOLLARS IN MILLIONS)
                                                 
    Total     Reinsurance     Worldwide  
    Insurance     Assumed     Total  
    2009     2008     2009     2008     2009     2008  
 
                                                
Net Premiums Written
   $ 8,277     $ 8,829     $ 17     $ 54     $ 8,294     $ 8,883  
Decrease (Increase) in Unearned Premiums
     172       28       24       15       196       43  
 
                                    
Net Premiums Earned
     8,449       8,857       41       69       8,490       8,926  
 
                                    
Net Losses Paid
     4,301       4,414       114       132       4,415       4,546  
Increase (Decrease) in Outstanding Losses
     442       918       (136 )     (125 )     306       793  
 
                                    
Net Losses Incurred
     4,743       5,332       (22 )     7       4,721       5,339  
 
                                    
Expenses Incurred
     2,534       2,644       7       25       2,541       2,669  
Dividends Incurred
     22       29       —       —       22       29  
 
                                    
Statutory Underwriting Income (Loss)
   $ 1,150     $ 852     $ 56     $ 37       1,206       889  
 
                                        
Increase (Decrease) in Deferred Acquisition Costs
                                     (11 )     29  
 
                                            
GAAP Underwriting Income
                                   $ 1,195     $ 918  
 
                                            
Ratios After Dividends to Policyholders:
                                                
Loss
     56.3 %     60.4 %     * %     * %     55.8 %     60.0 %
Expense
     30.7       30.1       *       *       30.7       30.2  
 
                                    
Combined
     87.0 %     90.5 %     * %     * %     86.5 %     90.2 %
 
                                    
Premiums Written as a % of Total
     99.8 %     99.4 %     0.2 %     0.6 %     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 17

 

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(DOLLARS IN MILLIONS)
                                                 
                    Outside        
                    the     Worldwide  
    United States     United States     Total  
    2009     2008     2009     2008     2009     2008  
 
                                                
Net Premiums Written
   $ 6,357     $ 6,718     $ 1,937     $ 2,165     $ 8,294     $ 8,883  
Decrease (Increase) in Unearned Premiums
     207       43       (11 )     —       196       43  
 
                                    
Net Premiums Earned
     6,564       6,761       1,926       2,165       8,490       8,926  
 
                                    
Net Losses Paid
     3,603       3,657       812       889       4,415       4,546  
Increase (Decrease) in Outstanding Losses
     60       660       246       133       306       793  
 
                                    
Net Losses Incurred
     3,663       4,317       1,058       1,022       4,721       5,339  
 
                                    
Expenses Incurred
     1,849       1,900       692       769       2,541       2,669  
Dividends Incurred
     22       29       —       —       22       29  
 
                                    
Statutory Underwriting Income (Loss)
   $ 1,030     $ 515     $ 176     $ 374       1,206       889  
 
                                        
Increase (Decrease) in Deferred Acquisition Costs
                                     (11 )     29  
 
                                            
GAAP Underwriting Income
                                   $ 1,195     $ 918  
 
                                            
Ratios After Dividends to Policyholders:
                                                
Loss
     56.0 %     64.1 %     54.9 %     47.2 %     55.8 %     60.0 %
Expense
     29.2       28.4       35.7       35.5       30.7       30.2  
 
                                    
Combined
     85.2 %     92.5 %     90.6 %     82.7 %     86.5 %     90.2 %
 
                                    
Premiums Written as a % of Total
     76.6 %     75.6 %     23.4 %     24.4 %     100.0 %     100.0 %
Page 10 of 17

 

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED SEPTEMBER 30, 2009 AND 2008
(DOLLARS IN MILLIONS)
                                                                 
    Personal                     Other     Total  
    Automobile     Homeowners     Personal     Personal  
    2009     2008     2009     2008     2009     2008     2009     2008  
 
                                                                
Net Premiums Written
   $ 150     $ 154     $ 620     $ 646     $ 176     $ 195     $ 946     $ 995  
Decrease (Increase) in Unearned Premiums
     (3 )     —       (27 )     (42 )     14       (3 )     (16 )     (45 )
 
                                                
Net Premiums Earned
     147       154       593       604       190       192       930       950  
 
                                                
Net Losses Paid
     89       88       278       298       88       95       455       481  
Increase (Decrease) in Outstanding Losses
     (3 )     (1 )     (11 )     129       20       46       6       174  
 
                                                
Net Losses Incurred
     86       87       267       427       108       141       461       655  
 
                                                
Expenses Incurred
     43       45       200       208       60       63       303       316  
Dividends Incurred
     —       —       —       —       —       —       —       —  
 
                                                
Statutory Underwriting Income (Loss)
   $ 18     $ 22     $ 126     $ (31 )   $ 22     $ (12 )   $ 166     $ (21 )
 
                                                
Ratios After Dividends to Policyholders:
                                                                
Loss
     58.5 %     56.5 %     45.0 %     70.7 %     56.8 %     73.5 %     49.6 %     68.9 %
Expense
     28.7       29.2       32.3       32.2       34.1       32.3       32.0       31.8  
 
                                                
Combined
     87.2 %     85.7 %     77.3 %     102.9 %     90.9 %     105.8 %     81.6 %     100.7 %
 
                                                
Premiums Written as a % of Total
     5.5 %     5.3 %     23.0 %     22.3 %     6.5 %     6.7 %     35.0 %     34.3 %
Page 11 of 17

 

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED SEPTEMBER 30, 2009 AND 2008
(DOLLARS IN MILLIONS)
                                                                                 
                                    Commercial     Commercial        
    Commercial     Commercial     Workers’     Property     Total  
    Multiple Peril     Casualty     Compensation     and Marine     Commercial  
    2009     2008     2009     2008     2009     2008     2009     2008     2009     2008  
Net Premiums Written
   $ 274     $ 308     $ 346     $ 385     $ 186     $ 205     $ 280     $ 280     $ 1,086     $ 1,178  
Decrease (Increase) in Unearned Premiums
     12       —       46       35       8       12       40       28       106       75  
 
                                                            
Net Premiums Earned
     286       308       392       420       194       217       320       308       1,192       1,253  
 
                                                            
Net Losses Paid
     136       138       207       204       88       79       162       207       593       628  
Increase (Decrease) in Outstanding Losses
     21       73       42       92       45       38       (13 )     97       95       300  
 
                                                            
Net Losses Incurred
     157       211       249       296       133       117       149       304       688       928  
 
                                                            
Expenses Incurred
     99       108       105       113       45       49       102       97       351       367  
Dividends Incurred
     —       —       —       —       6       9       —       —       6       9  
 
                                                            
Statutory Underwriting Income (Loss)
   $ 30     $ (11 )   $ 38     $ 11     $ 10     $ 42     $ 69     $ (93 )   $ 147     $ (51 )
 
                                                            
Ratios After Dividends to Policyholders:
                                                                                
Loss
     54.9 %     68.5 %     63.5 %     70.5 %     70.7 %     56.3 %     46.6 %     98.7 %     58.0 %     74.6 %
Expense
     36.1       35.1       30.4       29.3       25.0       25.0       36.4       34.6       32.5       31.4  
 
                                                            
Combined
     91.0 %     103.6 %     93.9 %     99.8 %     95.7 %     81.3 %     83.0 %     133.3 %     90.5 %     106.0 %
 
                                                            
Premiums Written as a % of Total
     10.1 %     10.6 %     12.8 %     13.3 %     6.9 %     7.1 %     10.4 %     9.7 %     40.2 %     40.7 %

Page 12 of 17

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED SEPTEMBER 30, 2009 AND 2008
(DOLLARS IN MILLIONS)
                                                 
    Professional                     Total  
    Liability     Surety     Specialty  
    2009     2008     2009     2008     2009     2008  
Net Premiums Written
   $ 588     $ 617     $ 81     $ 92     $ 669     $ 709  
Decrease (Increase) in Unearned Premiums
     36       32       (1 )     (10 )     35       22  
 
                                    
Net Premiums Earned
     624       649       80       82       704       731  
 
                                    
Net Losses Paid
     321       462       —       14       321       476  
Increase (Decrease) in Outstanding Losses
     71       (76 )     1       14       72       (62 )
 
                                    
Net Losses Incurred
     392       386       1       28       393       414  
 
                                    
Expenses Incurred
     160       153       25       27       185       180  
Dividends Incurred
     —       —       1       2       1       2  
 
                                    
Statutory Underwriting Income (Loss)
   $ 72     $ 110     $ 53     $ 25     $ 125     $ 135  
 
                                    
Ratios After Dividends to Policyholders:
                                                
Loss
     62.8 %     59.5 %     1.3 %     35.0 %     55.9 %     56.8 %
Expense
     27.2       24.8       31.2       30.0       27.7       25.5  
 
                                    
Combined
     90.0 %     84.3 %     32.5 %     65.0 %     83.6 %     82.3 %
 
                                    
Premiums Written as a % of Total
     21.7 %     21.2 %     3.0 %     3.2 %     24.7 %     24.4 %

Page 13 of 17

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED SEPTEMBER 30, 2009 AND 2008
(DOLLARS IN MILLIONS)
                                                 
    Total     Reinsurance     Worldwide  
    Insurance     Assumed     Total  
    2009     2008     2009     2008     2009     2008  
Net Premiums Written
   $ 2,701     $ 2,882     $ 4     $ 18     $ 2,705     $ 2,900  
Decrease (Increase) in Unearned Premiums
     125       52       6       12       131       64  
 
                                    
Net Premiums Earned
     2,826       2,934       10       30       2,836       2,964  
 
                                    
Net Losses Paid
     1,369       1,585       30       48       1,399       1,633  
Increase (Decrease) in Outstanding Losses
     173       412       (38 )     (39 )     135       373  
 
                                    
Net Losses Incurred
     1,542       1,997       (8 )     9       1,534       2,006  
 
                                    
Expenses Incurred
     839       863       2       8       841       871  
Dividends Incurred
     7       11       —       —       7       11  
 
                                    
Statutory Underwriting Income (Loss)
   $ 438     $ 63     $ 16     $ 13       454       76  
 
                                    
Decrease in Deferred Acquisition Costs
                                     (31 )     (7 )
 
                                            
GAAP Underwriting Income
                                   $ 423     $ 69  
 
                                            
Ratios After Dividends to Policyholders:
                                                
Loss
     54.7 %     68.3 %     * %     * %     54.2 %     67.9 %
Expense
     31.1       30.1       *       *       31.2       30.2  
 
                                    
Combined
     85.8 %     98.4 %     * %     * %     85.4 %     98.1 %
 
                                    
Premiums Written as a % of Total
     99.9 %     99.4 %     0.1 %     0.6 %     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 17

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED SEPTEMBER 30, 2009 AND 2008
(DOLLARS IN MILLIONS)
                                                 
                    Outside        
                    the     Worldwide  
    United States     United States     Total  
    2009     2008     2009     2008     2009     2008  
Net Premiums Written
   $ 2,091     $ 2,239     $ 614     $ 661     $ 2,705     $ 2,900  
Decrease (Increase) in Unearned Premiums
     65       —       66       64       131       64  
 
                                    
Net Premiums Earned
     2,156       2,239       680       725       2,836       2,964  
 
                                    
Net Losses Paid
     1,117       1,352       282       281       1,399       1,633  
Increase (Decrease) in Outstanding Losses
     65       320       70       53       135       373  
 
                                    
Net Losses Incurred
     1,182       1,672       352       334       1,534       2,006  
 
                                    
Expenses Incurred
     618       638       223       233       841       871  
Dividends Incurred
     7       11       —       —       7       11  
 
                                    
Statutory Underwriting Income (Loss)
   $ 349     $ (82 )   $ 105     $ 158       454       76  
 
                                        
Decrease in Deferred Acquisition Costs
                                     (31 )     (7 )
 
                                            
GAAP Underwriting Income
                                   $ 423     $ 69  
 
                                            
Ratios After Dividends to Policyholders:
                                                
Loss
     55.0 %     75.0 %     51.8 %     46.1 %     54.2 %     67.9 %
Expense
     29.7       28.6       36.3       35.2       31.2       30.2  
 
                                    
Combined
     84.7 %     103.6 %     88.1 %     81.3 %     85.4 %     98.1 %
 
                                    
Premiums Written as a % of Total
     77.3 %     77.2 %     22.7 %     22.8 %     100.0 %     100.0 %

Page 15 of 17

 

THE CHUBB CORPORATION
Definitions of Key Terms
Underwriting Income (Loss)
Management evaluates underwriting results separately from investment results. The underwriting operations consist of four separate business units: personal insurance, commercial insurance, specialty insurance and reinsurance assumed. Performance of the business units is measured based on statutory underwriting results. Statutory accounting principles applicable to property and casualty insurance companies differ in certain respects from generally accepted accounting principles (GAAP). Under statutory accounting principles, policy acquisition and other underwriting expenses are recognized immediately, not at the time premiums are earned. Statutory underwriting income (loss) is arrived at by reducing premiums earned by losses and loss expenses incurred and statutory underwriting expenses incurred.
Management uses underwriting results determined in accordance with GAAP, among other measures, to assess the overall performance of the underwriting operations. To convert statutory underwriting results to a GAAP basis, 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 (loss) , the after-tax appreciation or depreciation, including unrealized other-than-temporary impairment losses, of the Corporation’s available-for-sale fixed maturities, which are carried at fair value. The appreciation or depreciation of available-for-sale fixed maturities is subject to fluctuation due to changes in interest rates and therefore could distort the analysis of trends. Management believes that book value per common share with available-for-sale fixed maturities at amortized cost, a non-GAAP financial measure, is an important measure of the underlying equity attributable to one share of common stock.
Combined Loss and Expense Ratio or Combined Ratio
The combined loss and expense ratio, expressed as a percentage, is the key measure of underwriting profitability. Management uses the combined loss and expense ratio calculated in accordance with statutory accounting principles applicable to property and casualty insurance companies to evaluate the performance of the underwriting operations. It is the sum of the ratio of losses and loss expenses to premiums earned (loss ratio) plus the ratio of statutory underwriting expenses to premiums written (expense ratio) after reducing both premium amounts by dividends to policyholders.

Page 16 of 17

 

THE CHUBB CORPORATION
Definitions of Key Terms
Operating Income
Operating income, a non-GAAP financial measure, is net income excluding after-tax realized investment gains and losses. Management uses operating income, among other measures, to evaluate its performance because the realization of investment gains and losses in any given period is largely discretionary as to timing and can fluctuate significantly, which could distort the analysis of trends.
Return on Equity and Operating Return on Equity
Return on equity is the ratio of annualized net income divided by average shareholders’ equity. Average shareholders’ equity is the average of the beginning and all quarter-end balances within the period.
Operating return on equity, a non-GAAP measure, is the ratio of annualized operating income divided by average shareholders’ equity excluding the after-tax unrealized appreciation or depreciation of investments. Consolidated shareholders’ equity includes, as part of accumulated other comprehensive income (loss), the after-tax appreciation or depreciation, including unrealized other-than-temporary impairment losses, of the Corporation’s available-for-sale fixed maturities and equity securities, which are carried at fair value. The appreciation or depreciation of available-for-sale fixed maturities and equity securities is subject to fluctuation and could distort the analysis of trends. Average shareholders’ equity excluding the after-tax unrealized appreciation or depreciation of investments is the average of the beginning and all quarter-end balances within the period. Management uses operating return on equity, among other measures, to assess the overall performance of the Corporation.
                                 
    Periods Ended September 30
    Third Quarter   Nine Months
    2009   2008   2009   2008
    (dollars in millions)
Annualized Net Income
   $ 2,384     $ 1,056     $ 1,984     $ 1,863  
Average Shareholders’ Equity
   $ 15,011     $ 13,869     $ 14,315     $ 14,132  
 
                                
Return on Equity
     15.9 %     7.6 %     13.9 %     13.2 %
 
                                
Annualized Operating Income
   $ 2,208     $ 1,352     $ 2,132     $ 1,968  
Average Shareholders’ Equity Excluding Unrealized Appreciation or Depreciation
   $ 14,270     $ 13,982     $ 13,934     $ 13,963  
 
                                
Operating Return on Equity
     15.5 %     9.7 %     15.3 %     14.1 %

Page 17 of 17