-----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, SkAQV8DZKy0xWXk3uySvfizOf5o2rr79xBEdEK+zP9ExS4JvGWBkFPmVuJTUWMiR A/gtX06wOzfFURfhO9cIdg== 0000950103-98-000918.txt : 19981030 0000950103-98-000918.hdr.sgml : 19981030 ACCESSION NUMBER: 0000950103-98-000918 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981029 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981029 SROS: NYSE 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: SEC FILE NUMBER: 001-08661 FILM NUMBER: 98732791 BUSINESS ADDRESS: STREET 1: 15 MOUNTAIN VIEW RD P O BOX 1615 CITY: WARREN STATE: NJ ZIP: 07061 BUSINESS PHONE: 9805802000 8-K 1 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 October 29, 1998 (Date of earliest event reported) The Chubb Corporation (Exact name of registrant as specified in its charter) New Jersey 1-8661 13-2595722 - --------------- ---------------- ------------------- (State or other (Commission File (IRS Employer jurisdiction of Number) Identification No.) incorporation) 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) Item 5. Other Information On October 29, 1998, The Chubb Corporation (the "Registrant") issued the press release attached as Exhibit 20.1 to this report and incorporated herein by reference. Certain statements in this Report on Form 8-K and the exhibit hereto may be considered to be "forward looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995, such as statements that include the words or phrases "is expected to," "plan to," "intends" or other similar expressions. The factors which could cause actual results to differ materially from those suggested by any such statements include, but are not limited to, those discussed or identified from time to time in the Corporation's public filings with the Securities & Exchange Commission and specifically to risks or uncertainties associated with the Corporation's expectations with respect to premium price increases or the non-renewal of underpriced insurance accounts, and, more generally, to: general economic conditions including changes in interest rates and the performance of the financial markets, changes in domestic and foreign laws, regulations and taxes, changes in competition and pricing environments, regional or general changes in asset valuation, the occurrence of significant natural disasters, the inability to reinsure certain risks economically, the adequacy of loss reserves, as well as general market conditions, competition, pricing and restructurings. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (c) Exhibits. 20.1. Registrant's press release dated October 29, 1998. SIGNATURE 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: October 29, 1998 By: /s/ Robert Rusis ------------------------------- Name: Robert Rusis Title: Senior Vice President and General Counsel EXHIBIT INDEX Exhibit Description of Exhibit 20.1 Registrant's press release, dated October 29, 1998. EX-20.1 2 EXHIBIT 20.1 FOR IMMEDIATE RELEASE Chubb Reports Third Quarter Earnings WARREN, N.J., October 29, 1998 -- The Chubb Corporation today announced lower earnings for the third quarter and first nine months of 1998, owing principally to more significant catastrophe losses and continued severe pricing pressure in standard commercial lines. Operating income in the current quarter was $149.8 million or $.90 per share compared with $175.1 million or $1.00 per share in 1997. Net income, which includes realized investment gains, was $173.4 million or $1.04 per share for the quarter compared with $194.0 million or $1.10 per share last year. All per share amounts are calculated on a diluted basis. Nine month operating income totaled $493.0 million or $2.90 per share before the $26 million or $.15 per share restructuring charge taken in the first quarter. This compares with $526.6 million or $2.99 per share in 1997. Net income was $549.4 million or $3.24 per share for the first nine months of 1998 compared with $574.8 million or $3.26 per share last year. Chubb's third quarter and nine month after-tax results are summarized below: Third Quarter Nine Months --------------- ---------------- Millions of Dollars 1998 1997 1998 1997 - ------------------- ------ ------ ------ ------- Operating Income Before Restructuring Charge $149.8 $175.1 $493.0 $526.6 Restructuring Charge - - (26.0) - ------ ------ ------ ------ Operating Income After Restructuring Charge 149.8 175.1 467.0 526.6 Realized Investment Gains 23.6 18.9 82.4 48.2 ------ ------ ------ ------ Net Income $173.4 $194.0 $549.4 $574.8 ====== ====== ====== ====== Per Diluted Share - ----------------- Operating Income Before Restructuring Charge $ .90 $1.00 $2.90 $2.99 Restructuring Charge - - (.15) - ----- ----- ----- ----- Operating Income After Restructuring Charge .90 1.00 2.75 2.99 Realized Investment Gains .14 .10 .49 .27 ----- ----- ----- ----- Net Income $1.04 $1.10 $3.24 $3.26 ===== ===== ===== ===== Effect of Catastrophe Losses $ .27 $ .10 $ .62 $ .21 "Catastrophe losses, particularly from Hurricane Georges but also from other storms, hurt results especially in commercial lines," said Dean R. O'Hare, chairman and chief executive officer. "Of much greater concern, however, are our underwriting results in standard commercial lines where competitive pressures are driving prices to increasingly unprofitable levels. Rate increases are an absolute necessity if we are to attain underwriting profitability." Mr. O'Hare said that premiums in standard commercial lines, including workers' compensation, casualty and commercial multi-peril, declined 3% in the quarter. "We must put profitability ahead of growth and not renew underpriced business. Our priorities in the coming months will be to renew good business at adequate rates and to move off of accounts where we cannot achieve underwriting profitability," he said. Commenting further on Chubb's property and casualty results, Mr. O'Hare said, "Personal lines turned in another outstanding quarter with premium growth of 9.3% and a combined ratio of 87.2%. Results were excellent across the board. Specialty commercial lines continue to perform well in tough market conditions. We continued to grow at double-digit rates in Europe, our largest international market." Net property and casualty premiums written in the third quarter increased 1.7% to $1.4 billion. For the nine months, reported net premiums written were flat at $4.1 billion. Reported growth for the nine months was affected by non-recurring transactions related to the termination of Chubb's reinsurance agreements with Royal & Sun Alliance Insurance Group plc. After adjusting for these transactions, which inflated reported premiums in the first quarter of 1997, core premium growth was 4.4% for the nine months. Third quarter premium growth was unaffected by these transactions. The combined ratio of 101.2% for the third quarter compares with 97.5% last year. For the first nine months, Chubb recorded combined ratios of 99.2% in 1998 and 96.4% in 1997. Catastrophe losses for the 1998 third quarter and nine months were $68.8 million and $160.8 million, respectively, adding 5.2 and 4.1 percentage points to the respective combined ratios for these periods. In the comparable periods of 1997, catastrophe losses were $28.0 million, representing 2.2 percentage points of the combined ratio for the quarter, and $56.5 million or 1.5 percentage points of the combined ratio for the nine months. Chubb reported an underwriting loss after taxes for the quarter of $15.0 million compared with underwriting income of $13.2 million last year. Underwriting income for the first nine months totaled $3.0 million in 1998 and $66.8 million in 1997. Property and casualty investment income after taxes increased 7.0% to $159.7 million or $.96 per share in the third quarter from $149.2 million or $.85 per share last year. For the nine months, investment income increased 7.5% to $472.1 million or $2.78 per share from $439.3 million or $2.48 per share in 1997. Chubb repurchased 3.9 million shares of its common stock in the open market in the third quarter, bringing aggregate 1998 stock purchases to 7.1 million shares as of the end of September. THE CHUBB CORPORATION --------------------- PERIODS ENDED SEPTEMBER 30 -------------------------- Third Quarter Nine Months 1998 1997 1998 1997 ---- ---- ---- ---- (in millions) Property and Casualty Underwriting Income (Loss) After Taxes $(15.0) $ 13.2 $ 3.0 $ 66.8 Investment Income After Taxes 159.7 149.2 472.1 439.3 ------ ------ ------ ------ Property and Casualty Income 144.7 162.4 475.1 506.1 Corporate and Other Income After Taxes 5.1 12.7 17.9 20.5 ------ ------ ------ ------ Operating Income Before Restructuring Charge 149.8 175.1 493.0 526.6 Restructuring Charge After Taxes - - (26.0) - ------ ------ ------ ------ Operating Income After Restructuring Charge 149.8 175.1 467.0 526.6 Realized Investment Gains After Taxes 23.6 18.9 82.4 48.2 ------ ------ ------ ------ Net Income $173.4 $194.0 $549.4 $574.8 ====== ====== ====== ====== For further information contact: Gail E. Devlin (908) 903-3245 Glenn A. Montgomery (908) 903-2365 PROPERTY AND CASUALTY PRODUCT MIX --------------------------------- NINE MONTHS ENDED SEPTEMBER 30 ---------------------------------------- Net Premiums Combined Loss and Written Expense Ratios ----------------- ------------------ 1998 1997 1998 1997 ---- ---- ---- ---- (in millions) Personal Insurance Automobile $ 233.1 $ 228.5 87.7% 86.5% Homeowners 551.1 533.1 93.3 92.1 Other 242.9 239.5 67.8 66.5 -------- -------- ----- ----- Total Personal 1,027.1 1,001.1 86.0 84.7 -------- -------- ----- ----- Commercial Insurance Multiple Peril 576.9 611.6 122.1 115.2 Casualty 673.3 687.3 114.9 112.4 Workers' Compensation 238.0 225.6 113.1 106.4 Property and Marine 414.5 447.5 112.0 105.7 Executive Protection 709.1 663.1 75.6 73.4 Financial Institutions 296.2 300.2 83.8 89.1 Other 201.4 200.4 102.3 83.8 -------- -------- ----- ----- Total Commercial 3,109.4 3,135.7 103.5 99.4 -------- -------- ----- ----- Total Before Reinsurance Assumed 4,136.5 4,136.8 99.2 96.0 Reinsurance Assumed - (3.8) - N/M -------- -------- ----- ----- Total $4,136.5 $4,133.0 99.2% 96.4% ======== ======== ===== ===== Effective January 1, 1997, the agreements pertaining to the exchange of reinsurance with Royal & Sun Alliance Insurance Group plc were terminated. Premiums written in the first quarter of 1997 included $170.8 million of non-recurring net premiums related to the reinsurance relationship with Sun Alliance. QUARTER ENDED SEPTEMBER 30 ---------------------------------------- Net Premiums Combined Loss and Written Expense Ratios ------------------ ------------------ 1998 1997 1998 1997 ---- ---- ---- ---- (in millions) Personal Insurance Automobile $ 80.9 $ 75.5 88.1% 87.8% Homeowners 199.2 180.5 92.3 90.5 Other 82.7 75.8 74.9 69.0 -------- -------- ----- ----- Total Personal 362.8 331.8 87.2 84.8 -------- -------- ----- ----- Commercial Insurance Multiple Peril 187.1 198.5 126.3 122.8 Casualty 212.6 215.3 109.9 108.6 Workers' Compensation 68.5 68.5 119.8 110.4 Property and Marine 129.2 144.6 116.8 103.4 Executive Protection 241.4 226.9 77.6 74.8 Financial Institutions 96.4 95.7 87.9 101.9 Other 68.7 63.2 116.3 86.2 -------- -------- ----- ----- Total Commercial 1,003.9 1,012.7 105.9 101.4 -------- -------- ----- ----- Total $1,366.7 $1,344.5 101.2% 97.5% ======== ======== ===== ===== -----END PRIVACY-ENHANCED MESSAGE-----