EX-99.3 4 d476140dex993.htm THE CHUBB CORPORATION 2012 UPDATE ON ASBESTOS RESERVES The Chubb Corporation 2012 Update on Asbestos Reserves

Exhibit 99.3



Date of release: 01/31/2013


The following materials contain “forward looking statements,” including those relating to loss reserves and claim estimates, that are subject to certain risks and uncertainties which could cause actual results to differ materially from those expressed or suggested by such statements. Such risks or uncertainties include but are not limited to those which may be noted more fully in the materials themselves, as well as those discussed or identified from time to time in The Chubb Corporation’s public filings with the Securities and Exchange Commission. The Chubb Corporation assumes no obligation to update any forward-looking information set forth in the following materials, which speak as of January 31, 2013 or as otherwise specified in the materials.






Purpose of Updated Review



Evaluation Methodology



Exposure Analysis



Asbestos Payments and Reserves



Three Year Reserve Comparison









Reassess Chubb’s ultimate liability regarding asbestos exposures using an internal analysis, reviewed by our independent outside consulting actuaries



Determine appropriate reserve levels



Ensure aggressive case management of asbestos claims


  manage our exposure


  identify trends or issues that may impact exposure



Provide relevant substantive information requested by investors and rating agencies






Chubb segmented its defendant policyholders into two groups

Traditional defendant policyholders (Tiers 1 & 2)


  Those engaged in asbestos mining, manufacturing and building products industries

Peripheral defendant policyholders (Tiers 3 & 4)


  Those who manufactured, distributed, or installed an asbestos-containing product or who owned or operated a facility where asbestos products were present




Within these policyholder categories:



All Tier 1 & 2 accounts and Tier 3 & 4 accounts with Chubb incurred losses of at least $3M or judged to have high potential exposure were evaluated individually. Claimant information and available coverage were reviewed for each defendant policyholder, including terms of coverage, policy limits and aggregate limits.



Tier 3 & 4 accounts not individually evaluated were analyzed in the aggregate using statistical techniques. Factors considered include available coverage, claimant count, report year, bankruptcy, coverage dispute and case reserve amount.



Future claims from unknown defendant policyholders were estimated based on claim reporting patterns and projected claim severities.




($ in millions)


     No. of Open
At 12/31/12
In 2012
At 12/31/12
     #      $      $  

Traditional Defendants Tier 1

     2         —           33   

Traditional Defendants Tier 2

     12         7         108   

Peripheral Defendants Tiers 3 & 4

     365         34         321   

All Other

        3         20   

Reserves for future claims from unknown policyholders

     Unknown         —           107   











     379         44         589   




Total net asbestos reserves at 12/31/12: $589M



Case reserves of $258M


  Established by Claim Department on known claims



IBNR reserves of $331M


  Includes provision for:



potential reserve development on known defendant policyholders (development)



future claims from unknown defendant policyholders (pure IBNR)



future declaratory judgment actions and other litigation





($ in Millions)

   2012     2011     2010  

Beginning Reserves

   $ 605      $ 631      $ 689   

Incurred Losses & LAE

     28        22        0   

Calendar Year Payments for Losses

     (25     (28     (36

Calendar Year Payments for LAE

     (19     (20     (22










Ending Reserves

   $ 589      $ 605      $ 631   

IBNR portion of Ending Reserves

   $ 331      $ 336      $ 359   






Chubb’s asbestos net reserves of $589M at 12/31/12 are based on our 2012 analysis of our ultimate asbestos liabilities



This reserve represents Chubb’s best estimate of our ultimate asbestos liability at 12/31/12



This reserve amount is at full (undiscounted) value, and no consideration has been given for legislative or judicial relief



The net reserve reflects a modest reinsurance recoverable amount of approximately 3% of the gross reserve



Net payments for asbestos liabilities in 2012 were $44M



Reserves at 12/31/12 calculate to a 3 year survival ratio of 11.8