-----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, HYksjG1BDd9Nu+CgWVvfek2jfa2PfevfKILpJa3IrV4ylV6jcjQj53I7N+xNBUL/ sfynY7Bm+RsQqnI3TNTsEQ== 0000950123-06-009366.txt : 20060725 0000950123-06-009366.hdr.sgml : 20060725 20060725161753 ACCESSION NUMBER: 0000950123-06-009366 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060725 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060725 DATE AS OF CHANGE: 20060725 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: 06979262 BUSINESS ADDRESS: STREET 1: 15 MOUNTAIN VIEW RD P O BOX 1615 CITY: WARREN STATE: NJ ZIP: 07061 BUSINESS PHONE: 9089032000 8-K 1 y23436e8vk.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 25, 2006
THE CHUBB CORPORATION
(Exact name of registrant as specified in its charter)
         
New Jersey   1-8661   13-2595722
 
(State or other jurisdiction of   (Commission   (IRS Employer
incorporation)   File Number)   Identification No.)
     
15 Mountain View Road, P.O. Box 1615, Warren, New Jersey
  07061-1615
 
(Address of principal executive offices)
  (Zip Code)
Registrant’s telephone number, including area code (908) 903-2000
Not Applicable
 
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

TABLE OF CONTENTS

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 25, 2006
EX-99.1: PRESS RELEASE
EX-99.2: SUPPLEMENTARY INVESTOR INFORMATION

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TABLE OF CONTENTS
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 25, 2006
Press release dated July 25, 2006 (furnished pursuant to Item 2.02 of Form 8-K)
Supplementary Investor Information Report (furnished pursuant to Item 2.02 of Form 8-K)

 

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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 this Item 2.02 of Form 8-K. On July 25, 2006, The Chubb Corporation (Chubb) issued a press release announcing its financial results for the quarter ended June 30, 2006. On July 25, 2006, Chubb also posted on its web site at www.chubb.com the Supplementary Investor Information Report (SIIR) relating to its 2006 second quarter results. Copies of the press release and the SIIR are attached to this Form 8-K as Exhibits 99.1 and 99.2, respectively. In its press release, the SIIR and the conference call to discuss its 2006 second quarter results, scheduled to be webcast at 5:00 P.M. on July 25, 2006, Chubb presents, and will present, its results of operations in the manner that it believes is most meaningful to investors, which includes certain measures that are not based on accounting principles generally accepted in the United States, as more fully described in the press release and the SIIR furnished as Exhibits 99.1 and 99.2, respectively, to this Form 8-K and incorporated by reference into this Item 2.02 as if fully set forth herein.
Item 9.01 Financial Statements and Exhibits.
     (c) Exhibits.
  99.1   Press release dated July 25, 2006 (furnished pursuant to Item 2.02 of Form 8-K)
 
  99.2   Supplementary Investor Information Report (furnished pursuant to Item 2.02 of Form 8-K)

 

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SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  THE CHUBB CORPORATION
 		  
Date: July 25, 2006  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 25, 2006
     
Exhibit No.   Description
 
99.1
  Press release dated July 25, 2006 (furnished pursuant to Item 2.02 of Form 8-K)
 
    
99.2
  Supplementary Investor Information Report (furnished pursuant to Item 2.02 of Form 8-K)

 

EX-99.1 2 y23436exv99w1.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 $1.41;
Operating Income per Share Increases 18% to $1.35;
Combined Ratio Improves to 85.2% from 88.3%;
2006 Operating Income per Share Guidance Is Raised to Range of $4.90 to $5.10
     WARREN, New Jersey, July 25, 2006 — The Chubb Corporation [NYSE: CB] today reported that net income in the second quarter of 2006 was $598 million, or $1.41 per share, compared to $495 million, or $1.23 per share, in the second quarter of 2005.
     Operating income, which the company defines as net income excluding after-tax realized investment gains and losses, increased to $571 million from $461 million in the second quarter of 2005. Operating income per share increased 18% to $1.35 from $1.14.
     The second quarter combined loss and expense ratio improved to 85.2% in 2006 from 88.3% in 2005. Catastrophe losses for the second quarter of 2006 were $80 million, accounting for 2.7 percentage points of the combined ratio. In the second quarter of 2005, catastrophe losses were $21 million and accounted for 0.7 points of the combined ratio. The expense ratio for the second quarter was 28.5% in 2006 and 28.0% in 2005.
     “Chubb had another outstanding quarter,” said John D. Finnegan, Chairman, President and Chief Executive Officer. “Each of our three major business units contributed substantially to earnings, and the specialty business reached a milestone in its recovery by achieving a combined ratio below 90%. In addition to continued strong earnings, growth in our insurance business was up from the first quarter in what remains a generally stable market environment.”
     Second quarter net written premiums for the insurance business increased 3% to $3.0 billion. Premiums for the reinsurance assumed business declined 51%, reflecting the impact of the Chubb Re—Harbor Point transaction completed in December 2005. Total net written premiums declined 1% to $3.1 billion.
     Property and casualty investment income after taxes for the second quarter increased 10% to $288 million in 2006 from $261 million in 2005.

 

2

     During the second quarter of 2006, Chubb repurchased 5.8 million shares of its common stock at a total cost of approximately $290 million.
Six Month Results
     For the first six months of 2006, net income was $1.3 billion or $2.99 per share, compared with $965 million or $2.41 per share for the first half of 2005. Operating income for the first half of 2006 totaled $1.2 billion or a record $2.77 per share, compared with $902 million or $2.25 per share for the first half of 2005.
     For the first six months of 2006, net written premiums for the insurance business grew 1% to $5.8 billion. Premiums for the reinsurance assumed business declined 48%. Total net written premiums declined 3% to $6.0 billion.
     The combined ratio for the first half was 84.0% in 2006 and 88.9% in 2005. The impact of catastrophes for the first half of 2006 accounted for 1.4 percentage points of the combined ratio. In the first half of 2005, catastrophe losses represented 0.7 percentage points of the combined ratio. The expense ratio for the first half was 28.8% in 2006 and 28.4% in 2005.
     Property and casualty investment income after taxes increased 11% to $567 million in the first half of 2006 from $513 million in the corresponding period a year earlier.
     During the first half of 2006, Chubb repurchased 11 million shares of its common stock at a total cost of approximately $539 million.
Outlook for 2006
     “In light of Chubb’s record earnings in the first six months and our positive outlook for the second half,” said Mr. Finnegan, “we are raising guidance for 2006 full year operating income per share to a range of $4.90 to $5.10.” The company’s previous guidance, provided in January, was $4.30 to $4.50 per share. “Because the magnitude and timing of catastrophe losses are difficult to forecast,” said Mr. Finnegan, “the revised operating income 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 18 cents.

 

3

     The revised 2006 operating income guidance also assumes:
  •   Net written premium growth for the full year in the low single digits for the insurance business;
 
  •   A combined ratio between 86% and 88% for the year, based on a combined ratio of 84% to 86% for Chubb Personal Insurance, 85% to 87% for Chubb Commercial Insurance and 89% to 91% for Chubb Specialty Insurance. These combined ratio forecasts are based on the assumption of 4 points of catastrophe losses for the full year, which implies significantly higher catastrophe losses for CPI and CCI in the second half of the year than they experienced in the first half;
 
  •   Growth of property and casualty investment income after taxes of 9% to 11% for the year; and
 
  •   Average diluted shares outstanding of 423 million for the full 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 7% in the second quarter of 2006 to $934 million. CPI’s combined ratio was 78.5%, compared to 81.0% in the second quarter of 2005. Catastrophe losses for the quarter accounted for 4.8 percentage points of the combined ratio in 2006 and 1.5 points in 2005. Excluding the impact of catastrophes, CPI’s second quarter combined ratio was 73.7% in 2006 and 79.5% in 2005.
     The Homeowners line grew 7%, and the combined ratio was 72.6%. The Personal Automobile line grew 6% and had a combined ratio of 85.9%, while Other Personal Lines grew 8% and had a combined ratio of 92.6%.
     Chubb Commercial Insurance (CCI) net written premiums for the second quarter of 2006 increased 2% to $1.3 billion. The combined ratio was 85.4%, including 3.1 percentage points of catastrophes. In the second quarter of 2005, CCI’s combined ratio was 86.7%, including 0.9 percentage points of catastrophes. Excluding the impact of catastrophes, CCI’s second quarter combined ratio was 82.3% in 2006 and 85.8% in 2005.
     Average renewal rates in the U.S. were down 1% for CCI, which retained 83% of the U.S. premiums that came up for renewal. The ratio of new to lost business was 1 to 1 in the U.S.

 

4

     Chubb Specialty Insurance (CSI) net written premiums declined 1% to $739 million. The combined ratio was 89.0%, compared to 98.3% in the second quarter of 2005.
     Professional Liability (PL) net written premiums were down 5%, and the business had a combined ratio of 92.0%. In the U.S., average renewal rates for PL were down 2%, renewal retention was 82% and the ratio of new to lost business was 1 to 1. Excluding the hospital medical malpractice and managed care errors & omissions businesses which CSI exited in July 2005, PL premiums were flat, and in the U.S. renewal retention was 87% and the ratio of new to lost business was 1.5 to 1.
     Surety net written premiums in the second quarter were up 60%. About half the increase resulted from the nonrenewal of a reinsurance treaty. Surety’s combined ratio was 58.7%.
Webcast Conference Call to be Held Today at 5:00 P.M.
     Chubb’s senior management will discuss the company’s second quarter performance with investors and analysts today, July 25th, at 5:00 P.M. Eastern Daylight Time. The conference call will be webcast live on the Internet at www.chubb.com and archived later in the day for replay. The company has posted its Supplementary Investor Information Report at http://www.chubb.com.
     All financial results in this release and attachments are unaudited.
About Chubb
     Founded in 1882, the Chubb Group of Insurance Companies provide property and casualty insurance for personal and commercial customers worldwide through 8,000 independent agents and brokers. Chubb’s global network includes branches and affiliates in North America, Europe, Latin America, Asia and Australia.
         
For further information contact:
  Investors:   Glenn A. Montgomery
 
      (908) 903-2365
 
  Media:   Mark E. Greenberg
 
      (908) 903-2682

 

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 are made pursuant to the safe harbor provisions of the PSLRA and include statements regarding management’s outlook for the second half of 2006 and 2006 full year operating income per share guidance and related assumptions. Forward-looking statements are made based upon management’s current expectations and beliefs concerning trends and future developments and their potential effects on us. These statements are not guarantees of future performance. Actual results may differ materially from those suggested by forward-looking statements as a result of risks and uncertainties, which include, among others, those discussed or identified from time to time in our public filings with the Securities and Exchange Commission and those associated with:
•   global political conditions and the occurrence of terrorist attacks, including any nuclear, biological, chemical or radiological events;
 
•   the effects of the outbreak or escalation of war or hostilities;
 
•   premium pricing and profitability or growth estimates overall or by lines of business or geographic area, and related expectations with respect to the timing and terms of any required regulatory approvals;
 
•   adverse changes in loss cost trends;
 
•   the ability to retain existing business;
 
•   our expectations with respect to cash flow projections and investment income and with respect to other income;
 
•   the adequacy of loss reserves, including:
  -   our expectations relating to reinsurance recoverables;
 
  -   the willingness of parties, including us, to settle disputes;
 
  -   developments in judicial decisions or regulatory or legislative actions relating to coverage and liability for asbestos, toxic waste and 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:
  -   the effects 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 investigations into market practices, in particular contingent commissions and loss mitigation and finite reinsurance arrangements, in the property and casualty insurance industry together with any legal or regulatory proceedings, related settlements and industry reform or other changes with respect to contingent commissions or otherwise arising therefrom;
 
•   the impact of legislative and regulatory developments on our business, including those relating to terrorism and large-scale catastrophes;
 
•   any downgrade in our claims-paying, financial strength or other credit ratings;
 
•   the ability of our subsidiaries to pay us dividends;
 
•   general economic and market conditions including:
  -   changes in interest rates, market credit spreads and the performance of the financial markets;
 
  -   the effects of inflation;
 
  -   changes in domestic and foreign laws, regulations and taxes;
 
  -   changes in competition and pricing environments;
 
  -   regional or general changes in asset valuations;
 
  -   the inability to reinsure certain risks economically;
 
  -   changes in the litigation environment; and
•   our ability to implement management’s strategic plans and initiatives.
          The Corporation assumes no obligation to update any forward-looking information set forth in this document, which speak as of the date hereof.

 

 

 8 
THE CHUBB CORPORATION
SUPPLEMENTARY FINANCIAL DATA
(Unaudited)
                                 
    Periods Ended June 30  
    Second Quarter     Six Months  
    2006     2005     2006     2005  
    (in millions)  
PROPERTY AND CASUALTY INSURANCE
                                
Underwriting
                                
Net Premiums Written
   $ 3,081     $ 3,113     $ 6,006     $ 6,169  
Increase in Unearned Premiums
     (111 )     (94 )     (17 )     (115 )
 
                        
Premiums Earned
     2,970       3,019       5,989       6,054  
 
                        
Losses and Loss Expenses
     1,679       1,819       3,297       3,654  
Operating Costs and Expenses
     876       869       1,726       1,748  
Increase in Deferred Policy Acquisition Costs
     (37 )     (4 )     (29 )     (9 )
Dividends to Policyholders
     8       5       15       12  
 
                        
 
                                
Underwriting Income
     444       330       980       649  
 
                        
 
                                
Investments
                                
Investment Income Before Expenses
     368       332       725       653  
Investment Expenses
     10       7       19       15  
 
                        
 
                                
Investment Income
     358       325       706       638  
 
                        
 
                                
Other Income (Charges)
     1       1       6       (2 )
 
                        
 
                                
Property and Casualty Income
     803       656       1,692       1,285  
 
                                
CORPORATE AND OTHER
     (11 )     (25 )     (54 )     (87 )
 
                        
 
                                
CONSOLIDATED OPERATING INCOME BEFORE INCOME TAX
     792       631       1,638       1,198  
 
                                
Federal and Foreign Income Tax
     221       170       464       296  
 
                        
 
                                
CONSOLIDATED OPERATING INCOME
     571       461       1,174       902  
 
                                
REALIZED INVESTMENT GAINS AFTER INCOME TAX
     27       34       96       63  
 
                        
 
                                
CONSOLIDATED NET INCOME
   $ 598     $ 495     $ 1,270     $ 965  
 
                        
 
                                
PROPERTY AND CASUALTY INVESTMENT INCOME AFTER INCOME TAX
   $ 288     $ 261     $ 567     $ 513  
 
                        

 

 

 9 
                                 
    Periods Ended June 30  
    Second Quarter     Six Months  
    2006     2005     2006     2005  
OUTSTANDING SHARE DATA
                                
(in millions)
                                
Average Common and Potentially Dilutive Shares
     424.1       404.5       424.1       400.7  
Actual Common Shares at End of Period
     410.8       396.7       410.8       396.7  
 
                                
DILUTED EARNINGS PER SHARE DATA
                                
Operating Income
   $ 1.35     $ 1.14     $ 2.77     $ 2.25  
Realized Investment Gains
     .06       .09       .22       .16  
 
                        
Net Income
   $ 1.41     $ 1.23     $ 2.99     $ 2.41  
 
                        
 
                                
Effect of Catastrophes
   $ (.12 )   $ (.04 )   $ (.12 )   $ (.07 )
 
                        
                         
    June 30   Dec. 31   June 30
    2006   2005   2005
BOOK VALUE PER COMMON SHARE
   $ 30.77     $ 29.67     $ 28.38  
 
                        
BOOK VALUE PER COMMON SHARE,
                        
with Available-for-Sale Fixed Maturities at Amortized Cost
     31.41       29.12       27.02  
Share and per share amounts have been retroactively adjusted to reflect the two-for-one stock split effective March 31, 2006.
PROPERTY AND CASUALTY UNDERWRITING RATIOS
PERIODS ENDED JUNE 30
                                 
    Second Quarter   Six Months
    2006   2005   2006   2005
Losses and Loss Expenses to Premiums Earned
     56.7 %     60.3 %     55.2 %     60.5 %
Underwriting Expenses to Premiums Written
     28.5       28.0       28.8       28.4  
 
                                
 
                                
Combined Loss and Expense Ratio
     85.2 %     88.3 %     84.0 %     88.9 %
 
                                
 
                                
Effect of Catastrophes on Combined Loss and Expense Ratio
     2.7 %     .7 %     1.4 %     .7 %
PROPERTY AND CASUALTY LOSSES AND LOSS EXPENSES COMPONENTS
PERIODS ENDED JUNE 30
                                 
    Second Quarter   Six Months
    2006   2005   2006   2005
    (in millions)
Paid Losses and Loss Expenses
     $1,276       $1,543       $2,576       $2,868  
Increase in Unpaid Losses and Loss Expenses
     403       276       721       786  
 
                                
 
                                
Total Losses and Loss Expenses
     $1,679       $1,819       $3,297       $3,654  
 
                                

 

 

 10 
PROPERTY AND CASUALTY PRODUCT MIX
                                         
    Net Premiums Written     Combined Loss and  
                    % Increase     Expense Ratios  
    2006     2005     (Decrease)     2006     2005  
    (in millions)                          
SIX MONTHS ENDED JUNE 30
                                        
 
                                        
Personal Insurance
                                        
Automobile
   $ 337     $ 317       6 %     87.9 %     95.3 %
Homeowners
     1,097       1,020       8       73.1       76.9  
Other
     292       290       1       91.6       89.1  
 
                                
Total Personal
     1,726       1,627       6       79.1       82.7  
 
                                
 
                                        
Commercial Insurance
                                        
Multiple Peril
     645       641       1       75.4       82.8  
Casualty
     895       910       (2 )     93.4       97.3  
Workers’ Compensation
     472       496       (5 )     81.3       84.9  
Property and Marine
     607       586       4       73.2       70.8  
 
                                
Total Commercial
     2,619       2,633       (1 )     82.1       85.3  
 
                                
 
                                        
Specialty Insurance
                                        
Professional Liability
     1,271       1,337       (5 )     93.7       101.5  
Surety
     148       105       41       48.0       101.3  
 
                                
Total Specialty
     1,419       1,442       (2 )     89.8       101.6  
 
                                
 
                                        
Total Insurance
     5,764       5,702       1       83.3       88.8  
 
                                        
Reinsurance Assumed
     242       467       (48 )     100.4       89.6  
 
                                
 
                                        
Total
   $ 6,006     $ 6,169       (3 )     84.0 %     88.9 %
 
                                
 
                                        
QUARTERS ENDED JUNE 30
                                        
 
                                        
Personal Insurance
                                        
Automobile
   $ 182     $ 171       6 %     85.9       95.2 %
Homeowners
     609       568       7       72.6       73.7  
Other
     143       132       8       92.6       91.6  
 
                                
Total Personal
     934       871       7       78.5       81.0  
 
                                
 
                                        
Commercial Insurance
                                        
Multiple Peril
     319       305       5       80.4       83.3  
Casualty
     455       458       (1 )     92.4       100.9  
Workers’ Compensation
     216       218       (1 )     84.7       84.1  
Property and Marine
     304       287       6       80.9       71.3  
 
                                
Total Commercial
     1,294       1,268       2       85.4       86.7  
 
                                
 
                                        
Specialty Insurance
                                        
Professional Liability
     656       691       (5 )     92.0       101.4  
Surety
     83       52       60       58.7       54.2  
 
                                
Total Specialty
     739       743       (1 )     89.0       98.3  
 
                                
 
                                        
Total Insurance
     2,967       2,882       3       84.4       88.1  
 
                                        
Reinsurance Assumed
     114       231       (51 )     105.1       91.3  
 
                                
 
                                        
Total
   $ 3,081     $ 3,113       (1 )     85.2 %     88.3 %
 
                                

 

EX-99.2 3 y23436exv99w2.htm EX-99.2: SUPPLEMENTARY INVESTOR INFORMATION EX-99.2
 

Exhibit 99.2
             
(CHUBB LOGO)
  The
Chubb
Corporation 		  Supplementary
Investor
Information 		  June 30, 2006
This report is for informational purposes only. It should be read in conjunction with documents filed by The Chubb Corporation with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

 

 

THE CHUBB CORPORATION
SUPPLEMENTARY INVESTOR INFORMATION
TABLE OF CONTENTS
JUNE 30, 2006
     
    Page
The Chubb Corporation:
    
Consolidated Balance Sheet Highlights
   1
Share Repurchase Activity
   2
 
    
Summary of Invested Assets:
    
Corporate
   3
Property and Casualty
   3
 
    
Investment Income After Taxes:
    
Corporate
   4
Property and Casualty
   4
 
    
Property and Casualty Insurance Group:
    
Statutory Policyholders’ Surplus
   4
Change in Net Unpaid Losses
   5
Underwriting Results — Year-To-Date
   6-10
Underwriting Results — Quarterly
   11-15
 
    
Definitions of Key Terms
   16

 

 

THE CHUBB CORPORATION
June 30, 2006
Share and per share amounts have been retroactively adjusted to reflect the two-for-one stock split effective March 31, 2006.

 

 

CONSOLIDATED BALANCE SHEET HIGHLIGHTS
                 
    June 30     Dec. 31  
    2006     2005  
    (in millions)  
Invested Assets (at carrying value)
                
Short Term Investments
   $ 1,459     $ 1,899  
Fixed Maturities
                
Tax Exempt
     16,516       15,955  
Taxable
     14,555       14,568  
Equity Securities
     2,578       2,212  
 
            
Total Invested Assets
   $ 35,108     $ 34,634  
 
            
 
                
Unrealized Appreciation of Fixed Maturities Carried at Amortized Cost
   $ 8     $ 11  
 
            
 
                
Capitalization
                
Long Term Debt
   $ 2,462     $ 2,467  
Shareholders’ Equity
     12,639       12,407  
 
            
Total Capitalization
   $ 15,101     $ 14,874  
 
            
 
                
DEBT AS A PERCENTAGE OF TOTAL CAPITALIZATION
     16.3 %     16.6 %
 
                
Actual Common Shares Outstanding
     410.8       418.1  
 
                
Book Value Per Common Share
   $ 30.77     $ 29.67  
 
                
Book Value Per Common Share, with Available-for-Sale Fixed Maturities at Amortized Cost
   $ 31.41     $ 29.12  

Page 1 of 16

 

THE CHUBB CORPORATION
SHARE REPURCHASE ACTIVITY
                         
    Periods Ended June 30    
    Second   Six   From
    Quarter   Months   December 2005
    2006   2006   to June 30, 2006
    (dollars in millions, except per share amounts)
Cost of Shares Repurchased
   $ 290     $ 539     $ 674  
 
                        
Average Cost Per Share
   $ 50.22     $ 49.04     $ 48.91  
 
                        
Shares Repurchased
     5,772,800       10,998,362       13,786,162  
In December 2005, the Board of Directors authorized the repurchase of up to 28,000,000 shares of the Corporation’s common stock. The authorization has no expiration date. As of June 30, 2006, 14,213,838 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  
    2006     2005     2006     2005     2006     2005  
                    (in millions)                  
Short Term Investments
   $ 626     $ 929     $ 626     $ 929     $ 626     $ 929  
 
Taxable Fixed Maturities
     1,350       1,355       1,307       1,338       1,307       1,338  
 
Equity Securities
     5       5       8       8       8       8  
 
                                    
 
TOTAL
   $ 1,981     $ 2,289     $ 1,941     $ 2,275     $ 1,941     $ 2,275  
 
                                    
PROPERTY AND CASUALTY
                                                 
    Cost or     Market     Carrying  
    Amortized Cost     Value     Value  
    June 30     Dec. 31     June 30     Dec. 31     June 30     Dec. 31  
    2006     2005     2006     2005     2006     2005  
                    (in millions)                  
Short Term Investments
   $ 833     $ 970     $ 833     $ 970     $ 833     $ 970  
 
Fixed Maturities
                                                
 
Tax Exempt
     16,532       15,654       16,524       15,966       16,516       15,955  
 
Taxable
     13,502       13,160       13,248       13,230       13,248       13,230  
 
Common Stocks
     2,377       2,031       2,516       2,149       2,516       2,149  
 
Preferred Stocks
     52       52       54       55       54       55  
 
                                    
 
TOTAL
   $ 33,296     $ 31,867     $ 33,175     $ 32,370     $ 33,167     $ 32,359  
 
                                    
Page 3 of 16

 

 

THE CHUBB CORPORATION
INVESTMENT INCOME AFTER TAXES
                                 
    PERIODS ENDED JUNE 30  
    SECOND QUARTER     SIX MONTHS  
    2006     2005     2006     2005  
            (in millions)          
CORPORATE INVESTMENT INCOME
   $ 16     $ 11     $ 31     $ 19  
 
                        
 
                                
PROPERTY AND CASUALTY INVESTMENT INCOME
                                
 
Dividends
   $ 14     $ 9     $ 22     $ 21  
Taxable Interest
     112       102       225       198  
Tax Exempt Interest
     169       154       333       303  
Investment Expenses
     (7 )     (4 )     (13 )     (9 )
 
                        
TOTAL
   $ 288     $ 261     $ 567     $ 513  
 
                        
 
                                
Effective Tax Rate
     19.6 %     19.6 %     19.7 %     19.6 %
 
                                
After Tax Annualized Yield
     3.48 %     3.47 %     3.47 %     3.45 %
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
    2006   2005   2005
            (in millions)        
Estimated Statutory Policyholders’ Surplus
   $ 10,000     $ 8,910     $ 8,600  
 
Rolling Year Statutory Net Premiums Written
     12,096       12,244       12,214  
 
Ratio of Statutory Net Premiums Written to Policyholders’ Surplus
     1.21:1       1.37:1       1.42:1  
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, 2006
                                         
                                    All other  
    Net Unpaid Losses     IBNR     Unpaid Losses  
                    Increase     Increase     Increase  
    6/30/06     12/31/05     (Decrease)     (Decrease)     (Decrease)  
                    (in millions)                  
Personal Insurance
                                        
 
Automobile
   $ 423     $ 418     $ 5     $ 4     $ 1  
Homeowners
     644       697       (53 )     (4 )     (49 )
Other
     596       580       16       43       (27 )
 
                              
Total Personal
     1,663       1,695       (32 )     43       (75 )
 
                              
 
                                        
Commercial Insurance
                                        
 
                                        
Multiple Peril
     1,635       1,596       39       23       16  
Casualty
     5,056       4,837       219       171       48  
Workers’ Compensation
     1,637       1,551       86       66       20  
Property and Marine
     711       755       (44 )     (17 )     (27 )
 
                              
Total Commercial
     9,039       8,739       300       243       57  
 
                              
 
                                        
Specialty Insurance
                                        
 
                                        
Professional Liability
     7,210       6,777       433       364       69  
Surety
     61       46       15       3       12  
 
                              
Total Specialty
     7,271       6,823       448       367       81  
 
                              
 
                                        
Total Insurance
     17,973       17,257       716       653       63  
 
                                        
Reinsurance Assumed
     1,461       1,456       5       (44 )     49  
 
                              
 
Total
   $ 19,434     $ 18,713     $ 721     $ 609     $ 112  
 
                              
Page 5 of 16

 

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(MILLIONS OF DOLLARS)
                                                                 
    Personal                     Other     Total  
    Automobile     Homeowners     Personal     Personal  
    2006     2005     2006     2005     2006     2005     2006     2005  
Net Premiums Written
   $ 337     $ 317     $ 1,097     $ 1,020     $ 292     $ 290     $ 1,726     $ 1,627  
Increase (Decrease) in Unearned Premiums
     7       4       24       17       14       12       45       33  
 
                                                
 
                                                                
Net Premiums Earned
     330       313       1,073       1,003       278       278       1,681       1,594  
 
                                                
 
                                                                
Net Losses Paid
     192       186       502       478       154       142       848       806  
Increase (Decrease) in Outstanding Losses
     5       29       (53 )     (17 )     16       25       (32 )     37  
 
                                                
 
                                                                
Net Losses Incurred
     197       215       449       461       170       167       816       843  
 
                                                
 
                                                                
Expenses Incurred
     95       84       343       316       89       84       527       484  
 
                                                                
Dividends Incurred
     —       —       —       —       —       —       —       —  
 
                                                
 
                                                                
Statutory Underwriting Income (Loss)
   $ 38     $ 14     $ 281     $ 226     $ 19     $ 27     $ 338     $ 267  
 
                                                
 
                                                                
Ratios After Dividends to Policyholders:
                                                                
 
                                                                
Loss
     59.7 %     68.8 %     41.8 %     45.9 %     61.1 %     60.0 %     48.6 %     52.9 %
Expense
     28.2       26.5       31.3       31.0       30.5       29.1       30.5       29.8  
 
                                                
 
                                                                
Combined
     87.9 %     95.3 %     73.1 %     76.9 %     91.6 %     89.1 %     79.1 %     82.7 %
 
                                                
 
                                                                
Premiums Written as a % of Total
     5.6 %     5.1 %     18.3 %     16.5 %     4.9 %     4.7 %     28.8 %     26.3 %
Page 6 of 16

 

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(MILLIONS OF DOLLARS)
                                                                                 
                                    Commercial     Commercial        
    Commercial     Commercial     Workers’     Property     Total  
    Multiple Peril     Casualty     Compensation     and Marine     Commercial  
    2006     2005     2006     2005     2006     2005     2006     2005     2006     2005  
Net Premiums Written
   $ 645     $ 641     $ 895     $ 910     $ 472     $ 496     $ 607     $ 586     $ 2,619     $ 2,633  
Increase (Decrease) in Unearned Premiums
     (4 )     (18 )     28       51       21       42       40       33       85       108  
 
                                                            
 
                                                                                
Net Premiums Earned
     649       659       867       859       451       454       567       553       2,534       2,525  
 
                                                            
 
                                                                                
Net Losses Paid
     237       288       361       391       174       172       275       240       1,047       1,091  
Increase (Decrease) in Outstanding Losses
     39       41       219       223       86       108       (44 )     (36 )     300       336  
 
                                                            
 
                                                                                
Net Losses Incurred
     276       329       580       614       260       280       231       204       1,347       1,427  
 
                                                            
 
                                                                                
Expenses Incurred
     212       211       237       235       100       105       197       199       746       750  
 
                                                                                
Dividends Incurred
     —       —       —       —       14       11       —       —       14       11  
 
                                                            
 
                                                                                
Statutory Underwriting Income (Loss)
   $ 161     $ 119     $ 50     $ 10     $ 77     $ 58     $ 139     $ 150     $ 427     $ 337  
 
                                                            
 
                                                                                
Ratios After Dividends to Policyholders:
                                                                                
 
Loss
     42.5 %     50.0 %     66.9 %     71.4 %     59.5 %     63.3 %     40.7 %     36.8 %     53.5 %     56.8 %
Expense
     32.9       32.8       26.5       25.9       21.8       21.6       32.5       34.0       28.6       28.5  
 
                                                            
 
                                                                                
Combined
     75.4 %     82.8 %     93.4 %     97.3 %     81.3 %     84.9 %     73.2 %     70.8 %     82.1 %     85.3 %
 
                                                            
 
                                                                                
Premiums Written as a % of Total
     10.7 %     10.4 %     14.9 %     14.8 %     7.9 %     8.0 %     10.1 %     9.5 %     43.6 %     42.7 %
Page 7 of 16

 

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(MILLIONS OF DOLLARS)
                                                 
    Professional                     Total  
    Liability     Surety     Specialty  
    2006     2005     2006     2005     2006     2005  
Net Premiums Written
   $ 1,271     $ 1,337     $ 148     $ 105     $ 1,419     $ 1,442  
Increase (Decrease) in Unearned Premiums
     (87 )     (20 )     15       13       (72 )     (7 )
 
                                    
 
                                                
Net Premiums Earned
     1,358       1,357       133       92       1,491       1,449  
 
                                    
 
                                                
Net Losses Paid
     513       760       7       48       520       808  
Increase (Decrease) in Outstanding Losses
     433       300       15       9       448       309  
 
                                    
 
                                                
Net Losses Incurred
     946       1,060       22       57       968       1,117  
 
                                    
 
                                                
Expenses Incurred
     306       313       46       40       352       353  
 
                                                
Dividends Incurred
     —       —       1       1       1       1  
 
                                    
 
                                                
Statutory Underwriting Income (Loss)
   $ 106     $ (16 )   $ 64     $ (6 )   $ 170     $ (22 )
 
                                    
 
                                                
Ratios After Dividends to Policyholders:
                                                
 
                                                
Loss
     69.6 %     78.1 %     16.7 %     62.6 %     65.0 %     77.1 %
Expense
     24.1       23.4       31.3       38.7       24.8       24.5  
 
                                    
 
                                                
Combined
     93.7 %     101.5 %     48.0 %     101.3 %     89.8 %     101.6 %
 
                                    
 
                                                
Premiums Written as a % of Total
     21.2 %     21.7 %     2.5 %     1.7 %     23.6 %     23.4 %

Page 8 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(MILLIONS OF DOLLARS)
                                                 
    Total     Reinsurance     Worldwide  
    Insurance     Assumed     Total  
    2006     2005     2006     2005     2006     2005  
Net Premiums Written
   $ 5,764     $ 5,702     $ 242     $ 467     $ 6,006     $ 6,169  
Increase (Decrease) in Unearned Premiums
     58       134       (41 )     (19 )     17       115  
 
                                    
 
                                                
Net Premiums Earned
     5,706       5,568       283       486       5,989       6,054  
 
                                    
 
                                                
Net Losses Paid
     2,415       2,705       161       163       2,576       2,868  
Increase (Decrease) in Outstanding Losses
     716       682       5       104       721       786  
 
                                    
 
                                                
Net Losses Incurred
     3,131       3,387       166       267       3,297       3,654  
 
                                    
 
                                                
Expenses Incurred
     1,625       1,587       101       161       1,726       1,748  
 
                                                
Dividends Incurred
     15       12       —       —       15       12  
 
                                    
 
                                                
Statutory Underwriting Income (Loss)
   $ 935     $ 582     $ 16     $ 58     $ 951     $ 640  
 
                                        
 
                                                
Increase in Deferred Acquisition Costs
                                     29       9  
 
                                            
 
                                                
GAAP Underwriting Income
                                   $ 980     $ 649  
 
                                            
 
                                                
Ratios After Dividends to Policyholders:
                                                
 
                                                
Loss
     55.0 %     60.9 %     58.7 %     55.0 %     55.2 %     60.5 %
Expense
     28.3       27.9       41.7       34.6       28.8       28.4  
 
                                    
 
                                                
Combined
     83.3 %     88.8 %     100.4 %     89.6 %     84.0 %     88.9 %
 
                                    
 
                                                
Premiums Written as a % of Total
     96.0 %     92.4 %     4.0 %     7.6 %     100.0 %     100.0 %

Page 9 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(MILLIONS OF DOLLARS)
                                                 
                                    Worldwide  
    United States     Foreign     Total  
    2006     2005     2006     2005     2006     2005  
Net Premiums Written
   $ 4,758     $ 4,939     $ 1,248     $ 1,230     $ 6,006     $ 6,169  
Increase (Decrease) in Unearned Premiums
     (59 )     25       76       90       17       115  
 
                                    
 
                                                
Net Premiums Earned
     4,817       4,914       1,172       1,140       5,989       6,054  
 
                                    
 
                                                
Net Losses Paid
     2,218       2,369       358       499       2,576       2,868  
Increase (Decrease) in Outstanding Losses
     447       656       274       130       721       786  
 
                                    
 
                                                
Net Losses Incurred
     2,665       3,025       632       629       3,297       3,654  
 
                                    
 
                                                
Expenses Incurred
     1,304       1,347       422       401       1,726       1,748  
 
                                                
Dividends Incurred
     15       12       —       —       15       12  
 
                                    
 
                                                
Statutory Underwriting Income (Loss)
   $ 833     $ 530     $ 118     $ 110       951       640  
 
                                        
 
                                                
Increase in Deferred Acquisition Costs
                                     29       9  
 
                                            
 
                                                
GAAP Underwriting Income
                                   $ 980     $ 649  
 
                                            
 
                                                
Ratios After Dividends to Policyholders:
                                                
 
                                                
Loss
     55.5 %     61.7 %     53.9 %     55.2 %     55.2 %     60.5 %
Expense
     27.5       27.4       33.8       32.6       28.8       28.4  
 
                                    
 
                                                
Combined
     83.0 %     89.1 %     87.7 %     87.8 %     84.0 %     88.9 %
 
                                    
 
                                                
Premiums Written as a % of Total
     79.2 %     80.1 %     20.8 %     19.9 %     100.0 %     100.0 %

Page 10 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2006 AND 2005
(MILLIONS OF DOLLARS)
                                                                 
    Personal                     Other     Total  
    Automobile     Homeowners     Personal     Personal  
    2006     2005     2006     2005     2006     2005     2006     2005  
Net Premiums Written
   $ 182     $ 171     $ 609     $ 568     $ 143     $ 132     $ 934     $ 871  
Increase (Decrease) in Unearned Premiums
     16       15       70       62       4       (7 )     90       70  
 
                                                
 
                                                                
Net Premiums Earned
     166       156       539       506       139       139       844       801  
 
                                                
 
                                                                
Net Losses Paid
     94       92       266       226       67       89       427       407  
Increase (Decrease) in Outstanding Losses
     2       17       (40 )     (4 )     18       (4 )     (20 )     9  
 
                                                
 
                                                                
Net Losses Incurred
     96       109       226       222       85       85       407       416  
 
                                                
 
                                                                
Expenses Incurred
     51       43       187       169       45       40       283       252  
 
                                                                
Dividends Incurred
     —       —       —       —       —       —       —       —  
 
                                                
 
                                                                
Statutory Underwriting Income (Loss)
   $ 19     $ 4     $ 126     $ 115     $ 9     $ 14     $ 154     $ 133  
 
                                                
 
                                                                
Ratios After Dividends to Policyholders:
                                                                
 
                                                                
Loss
     57.9 %     70.0 %     41.9 %     43.9 %     61.1 %     61.4 %     48.2 %     52.0 %
Expense
     28.0       25.2       30.7       29.8       31.5       30.2       30.3       29.0  
 
                                                
 
                                                                
Combined
     85.9 %     95.2 %     72.6 %     73.7 %     92.6 %     91.6 %     78.5 %     81.0 %
 
                                                
 
                                                                
Premiums Written as a % of Total
     5.9 %     5.5 %     19.8 %     18.2 %     4.6 %     4.3 %     30.3 %     28.0 %

Page 11 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2006 AND 2005
(MILLIONS OF DOLLARS)
                                                                                 
                                    Commercial     Commercial        
    Commercial     Commercial     Workers’     Property     Total  
    Multiple Peril     Casualty     Compensation     and Marine     Commercial  
    2006     2005     2006     2005     2006     2005     2006     2005     2006     2005  
Net Premiums Written
   $ 319     $ 305     $ 455     $ 458     $ 216     $ 218     $ 304     $ 287     $ 1,294     $ 1,268  
Increase (Decrease) in Unearned Premiums
     (3 )     (23 )     23       25       (5 )     (7 )     24       5       39       —  
 
                                                            
 
                                                                                
Net Premiums Earned
     322       328       432       433       221       225       280       282       1,255       1,268  
 
                                                            
 
                                                                                
Net Losses Paid
     108       131       170       241       92       92       125       134       495       598  
Increase (Decrease) in Outstanding Losses
     42       34       120       88       37       41       13       (23 )     212       140  
 
                                                            
 
                                                                                
Net Losses Incurred
     150       165       290       329       129       133       138       111       707       738  
 
                                                            
 
                                                                                
Expenses Incurred
     108       101       115       114       51       50       96       92       370       357  
 
                                                                                
Dividends Incurred
     —       —       —       —       7       5       —       —       7       5  
 
                                                            
 
                                                                                
Statutory Underwriting Income (Loss)
   $ 64     $ 62     $ 27     $ (10 )   $ 34     $ 37     $ 46     $ 79     $ 171     $ 168  
 
                                                            
 
                                                                                
Ratios After Dividends to Policyholders:
                                                                                
 
                                                                                
Loss
     46.6 %     50.4 %     67.1 %     76.0 %     60.3 %     60.7 %     49.3 %     39.2 %     56.7 %     58.5 %
Expense
     33.8       32.9       25.3       24.9       24.4       23.4       31.6       32.1       28.7       28.2  
 
                                                            
 
                                                                                
Combined
     80.4 %     83.3 %     92.4 %     100.9 %     84.7 %     84.1 %     80.9 %     71.3 %     85.4 %     86.7 %
 
                                                            
 
                                                                                
Premiums Written as a % of Total
     10.3 %     9.8 %     14.8 %     14.7 %     7.0 %     7.0 %     9.9 %     9.2 %     42.0 %     40.7 %

Page 12 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2006 AND 2005
(MILLIONS OF DOLLARS)
                                                 
    Professional                     Total  
    Liability     Surety     Specialty  
    2006     2005     2006     2005     2006     2005  
Net Premiums Written
   $ 656     $ 691     $ 83     $ 52     $ 739     $ 743  
Increase (Decrease) in Unearned Premiums
     (17 )     12       14       4       (3 )     16  
 
                                    
 
                                                
Net Premiums Earned
     673       679       69       48       742       727  
 
                                    
 
                                                
Net Losses Paid
     277       435       8       30       285       465  
Increase (Decrease) in Outstanding Losses
     189       100       12       (23 )     201       77  
 
                                    
 
                                                
Net Losses Incurred
     466       535       20       7       486       542  
 
                                    
 
                                                
Expenses Incurred
     149       157       24       20       173       177  
 
                                                
Dividends Incurred
     —       —       1       —       1       —  
 
                                    
 
                                                
Statutory Underwriting Income (Loss)
   $ 58     $ (13 )   $ 24     $ 21     $ 82     $ 8  
 
                                    
 
                                                
Ratios After Dividends to Policyholders:
                                                
 
                                                
Loss
     69.3 %     78.8 %     29.4 %     13.9 %     65.6 %     74.5 %
Expense
     22.7       22.6       29.3       40.3       23.4       23.8  
 
                                    
 
                                                
Combined
     92.0 %     101.4 %     58.7 %     54.2 %     89.0 %     98.3 %
 
                                    
 
                                                
Premiums Written as a % of Total
     21.3 %     22.2 %     2.7 %     1.7 %     24.0 %     23.9 %
Page 13 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2006 AND 2005
(MILLIONS OF DOLLARS)
                                                 
    Total     Reinsurance     Worldwide  
    Insurance     Assumed     Total  
    2006     2005     2006     2005     2006     2005  
Net Premiums Written
   $ 2,967     $ 2,882     $ 114     $ 231     $ 3,081     $ 3,113  
Increase (Decrease) in Unearned Premiums
     126       86       (15 )     8       111       94  
 
                                    
 
                                                
Net Premiums Earned
     2,841       2,796       129       223       2,970       3,019  
 
                                    
 
                                                
Net Losses Paid
     1,207       1,470       69       73       1,276       1,543  
Increase (Decrease) in Outstanding Losses
     393       226       10       50       403       276  
 
                                    
 
                                                
Net Losses Incurred
     1,600       1,696       79       123       1,679       1,819  
 
                                    
 
                                                
Expenses Incurred
     826       786       50       83       876       869  
 
                                                
Dividends Incurred
     8       5       —       —       8       5  
 
                                    
 
                                                
Statutory Underwriting Income (Loss)
   $ 407     $ 309     $ —     $ 17     $ 407     $ 326  
 
                                        
 
                                                
Increase in Deferred Acquisition Costs
                                     37       4  
 
                                            
 
                                                
GAAP Underwriting Income
                                   $ 444     $ 330  
 
                                            
 
                                                
Ratios After Dividends to Policyholders:
                                                
 
                                                
Loss
     56.5 %     60.8 %     61.2 %     55.0 %     56.7 %     60.3 %
Expense
     27.9       27.3       43.9       36.3       28.5       28.0  
 
                                    
 
                                                
Combined
     84.4 %     88.1 %     105.1 %     91.3 %     85.2 %     88.3 %
 
                                    
 
                                                
Premiums Written as a % of Total
     96.3 %     92.6 %     3.7 %     7.4 %     100.0 %     100.0 %

Page 14 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2006 AND 2005
(MILLIONS OF DOLLARS)
                                                 
                                    Worldwide  
    United States     Foreign     Total  
    2006     2005     2006     2005     2006     2005  
Net Premiums Written
   $ 2,490     $ 2,550     $ 591     $ 563     $ 3,081     $ 3,113  
Increase (Decrease) in Unearned Premiums
     117       102       (6 )     (8 )     111       94  
 
                                    
 
                                                
Net Premiums Earned
     2,373       2,448       597       571       2,970       3,019  
 
                                    
 
                                                
Net Losses Paid
     1,125       1,199       151       344       1,276       1,543  
Increase (Decrease) in Outstanding Losses
     210       301       193       (25 )     403       276  
 
                                    
 
                                                
Net Losses Incurred
     1,335       1,500       344       319       1,679       1,819  
 
                                    
 
                                                
Expenses Incurred
     683       691       193       178       876       869  
 
                                                
Dividends Incurred
     8       5       —       —       8       5  
 
                                    
 
                                                
Statutory Underwriting Income (Loss)
   $ 347     $ 252     $ 60     $ 74       407       326  
 
                                        
 
                                                
Increase in Deferred Acquisition Costs
                                     37       4  
 
                                            
 
                                                
GAAP Underwriting Income
                                   $ 444     $ 330  
 
                                            
 
                                                
Ratios After Dividends to Policyholders:
                                                
 
                                                
Loss
     56.4 %     61.4 %     57.6 %     55.9 %     56.7 %     60.3 %
Expense
     27.5       27.2       32.7       31.6       28.5       28.0  
 
                                    
 
                                                
Combined
     83.9 %     88.6 %     90.3 %     87.5 %     85.2 %     88.3 %
 
                                    
 
                                                
Premiums Written as a % of Total
     80.8 %     81.9 %     19.2 %     18.1 %     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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