CHUBB CORP - FORM 8-K - EX-99.4

Attached files

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8-K - FORM 8-K - CHUBB CORP	y86587e8vk.htm
EX-99.1 - EX-99.1 - CHUBB CORP	y86587exv99w1.htm
EX-99.3 - EX-99.3 - CHUBB CORP	y86587exv99w3.htm
EX-99.2 - EX-99.2 - CHUBB CORP	y86587exv99w2.htm

Exhibit 99.4


The	Supplementary	June 30, 2010
Chubb	Investor	(Revised)
Corporation	Information


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

In October 2010, page 10 of this Supplementary Investor Information Report was revised to reflect a reclassification between the United States results and the Outside the United States results. This reclassification had no impact on Worldwide Total results.

THE CHUBB CORPORATION
SUPPLEMENTARY INVESTOR INFORMATION
TABLE OF CONTENTS
JUNE 30, 2010


	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)


	June 30						Dec. 31
	2010						2009
				% of Total						% of Total
Invested Assets (at carrying value)
Short Term Investments	$	2,211			5	%	$	1,918			5	%
Fixed Maturities
Tax Exempt		19,629			47			19,587			47
Taxable		16,652			40			16,991			40
Equity Securities		1,263			3			1,433			3
Other Invested Assets		2,240			5			2,075			5

Total Invested Assets	$	41,995			100	%	$	42,004			100	%


Unrealized Appreciation of Investments
Fixed Maturities	$	1,830					$	1,388
Equity Securities		33						218

		1,863						1,606
Deferred Income Tax Liability		652						562

	$	1,211					$	1,044


Capitalization
Long Term Debt	$	3,975					$	3,975
Shareholders’ Equity		15,533						15,634

Total Capitalization	$	19,508					$	19,609


Debt as a Percentage of Total Capitalization		20.4	%					20.3	%

Actual Common Shares Outstanding		314.5						332.0

Book Value Per Common Share	$	49.39					$	47.09

Book Value Per Common Share, with Available-for-Sale Fixed Maturities at Amortized Cost	$	45.61					$	44.37

Page 1 of 17

THE CHUBB CORPORATION

SHARE REPURCHASE ACTIVITY

(dollars in millions, except per share amounts)


	Periods Ended June 30
	Second		Six		From
	Quarter		Months		December 2005
	2010		2010		to June 30, 2010
Cost of Shares Repurchased	$	636	$	980	$	6,932

Average Cost Per Share	$	51.14	$	50.54	$	50.15

Shares Repurchased		12,433,151		19,394,818		138,234,693

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 and 2008, 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. No shares remain under these share repurchase authorizations.

In December 2009, the Board of Directors authorized the repurchase of up to 25,000,000 shares of the Corporation’s common stock. In June 2010, the Board of Directors authorized an increase of 14,000,000 shares to the authorization approved in December 2009. The authorization has no expiration date. As of June 30, 2010, 16,765,307 shares remained under the share repurchase authorization.

Page 2 of 17

THE CHUBB CORPORATION

SUMMARY OF INVESTED ASSETS

CORPORATE


	Cost or				Carrying
	Amortized Cost				Value (a)
	June 30		Dec. 31		June 30		Dec. 31
	2010		2009		2010		2009
	(in millions)
Short Term Investments	$	761	$	1,017	$	761	$	1,017

Taxable Fixed Maturities		1,271		1,286		1,325		1,327

Equity Securities		205		205		148		202

Other Invested Assets		37		25		37		25


TOTAL	$	2,274	$	2,533	$	2,271	$	2,571

PROPERTY AND CASUALTY


	Cost or				Carrying
	Amortized Cost				Value (a)
	June 30		Dec. 31		June 30		Dec. 31
	2010		2009		2010		2009
	(in millions)
Short Term Investments	$	1,450	$	901	$	1,450	$	901

Fixed Maturities

Tax Exempt		18,615		18,720		19,629		19,587

Taxable		14,565		15,184		15,327		15,664

Equity Securities		1,025		1,010		1,115		1,231

Other Invested Assets		2,203		2,050		2,203		2,050


TOTAL	$	37,858	$	37,865	$	39,724	$	39,433


(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 include private equity limited partnerships 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 June 30
	Second Quarter						Six Months
	2010			2009			2010			2009
	(in millions)
CORPORATE INVESTMENT INCOME	$	22		$	9		$	30		$	18


PROPERTY AND CASUALTY INVESTMENT INCOME
Tax Exempt Interest	$	190		$	187		$	379		$	373
Taxable Interest		114			114			235			228
Other		12			15			21			26
Investment Expenses		(5	)		(4	)		(11	)		(9	)

TOTAL	$	311		$	312		$	624		$	618


Effective Tax Rate		19.2	%		19.4	%		19.2	%		19.3	%

After-Tax Annualized Yield		3.26	%		3.42	%		3.26	%		3.41	%

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


	June 30		Dec. 31		June 30
	2010		2009		2009
	(in millions)
Estimated Statutory Policyholders’ Surplus	$	14,400	$	14,526	$	13,300

Rolling Year Statutory Net Premiums Written	$	11,151	$	11,074	$	11,366

Ratio of Statutory Net Premiums Written to Policyholders’ Surplus		0.77:1		0.76:1		0.85:1

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
SIX MONTHS ENDED JUNE 30, 2010


											All Other
	Net Unpaid Losses							IBNR			Unpaid Losses
					Increase			Increase			Increase
	6/30/10		12/31/09		(Decrease)			(Decrease)			(Decrease)
					(in millions)
Personal Insurance

Automobile	$	395	$	400	$	(5	)	$	(15	)	$	10

Homeowners		786		665		121			87			34

Other		854		872		(18	)		22			(40	)


Total Personal		2,035		1,937		98			94			4


Commercial Insurance

Multiple Peril		1,715		1,615		100			89			11

Casualty		6,034		5,988		46			104			(58	)

Workers’ Compensation		2,162		2,138		24			31			(7	)

Property and Marine		805		758		47			42			5


Total Commercial		10,716		10,499		217			266			(49	)


Specialty Insurance

Professional Liability		7,371		7,552		(181	)		(96	)		(85	)

Surety		63		58		5			—			5


Total Specialty		7,434		7,610		(176	)		(96	)		(80	)


Total Insurance		20,185		20,046		139			264			(125	)

Reinsurance Assumed		667		740		(73	)		(55	)		(18	)


Total	$	20,852	$	20,786	$	66		$	209		$	(143	)

Page 5 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009
(DOLLARS IN MILLIONS)


	Personal												Other						Total
	Automobile						Homeowners						Personal						Personal
	2010			2009			2010			2009			2010			2009			2010			2009
Net Premiums Written	$	314		$	278		$	1,164		$	1,151		$	404		$	375		$	1,882		$	1,804
Decrease (Increase) in Unearned Premiums		(10	)		4			13			35			(27	)		(19	)		(24	)		20


Net Premiums Earned		304			282			1,177			1,186			377			356			1,858			1,824


Net Losses Paid		191			167			705			651			220			195			1,116			1,013
Increase (Decrease) in Outstanding Losses		(6	)		5			122			(42	)		(7	)		30			109			(7	)


Net Losses Incurred		185			172			827			609			213			225			1,225			1,006


Expenses Incurred		94			81			390			379			131			115			615			575

Dividends Incurred		—			—			—			—			—			—			—			—


Statutory Underwriting Income (Loss)	$	25		$	29		$	(40	)	$	198		$	33		$	16		$	18		$	243


Ratios After Dividends to Policyholders:

Loss		60.9	%		61.0	%		70.3	%		51.4	%		56.5	%		63.2	%		65.9	%		55.1	%
Expense		29.9			29.1			33.5			32.9			32.4			30.7			32.7			31.9


Combined		90.8	%		90.1	%		103.8	%		84.3	%		88.9	%		93.9	%		98.6	%		87.0	%


Premiums Written as a % of Total		5.6	%		5.0	%		20.6	%		20.6	%		7.1	%		6.7	%		33.3	%		32.3	%

Page 6 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009
(DOLLARS IN MILLIONS)

Commercial

Workers’

Property

Total

Multiple Peril

Casualty

Compensation

and Marine

Commercial

2010

2009

2010

2009

2010

2009

2010

2009

2010

2009

Net Premiums Written

540

561

812

815

409

424

691

673

2,452

2,473

Decrease (Increase) in Unearned Premiums

(49

)

(25

)

(40

)

(15

)

(63

)

(61

)

(136

)

(80

)

Net Premiums Earned

556

582

763

790

369

409

628

612

2,316

2,393

Net Losses Paid

259

273

373

398

201

192

302

365

1,135

1,228

Increase (Decrease) in Outstanding Losses

107

)

100

153

(45

)

302

173

Net Losses Incurred

366

267

473

551

238

263

360

320

1,437

1,401

Expenses Incurred

204

207

225

228

231

228

755

760

Dividends Incurred

—

Statutory Underwriting Income (Loss)

(14

)

108

111

221

Ratios After Dividends to Policyholders:

Loss

65.8

45.9

62.0

69.7

66.8

66.1

57.4

52.3

62.4

58.8

Expense

37.8

36.9

27.7

28.0

24.0

23.5

33.4

33.9

31.0

30.9

Combined

103.6

82.8

89.7

97.7

90.8

89.6

90.8

86.2

93.4

89.7

Premiums Written as a % of Total

9.6

10.0

14.4

14.6

7.2

7.6

12.2

12.0

43.4

44.2

Page 7 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009
(DOLLARS IN MILLIONS)

Professional

Total

Liability

Surety

Specialty

2010

2009

2010

2009

2010

2009

Net Premiums Written

1,153

1,137

159

162

1,312

1,299

Decrease (Increase) in Unearned Premiums

107

Net Premiums Earned

1,232

1,235

167

171

1,399

1,406

Net Losses Paid

794

677

802

691

Increase (Decrease) in Outstanding Losses

(70

)

111

)

(66

)

103

Net Losses Incurred

724

788

736

794

Expenses Incurred

322

305

379

360

Dividends Incurred

—

Statutory Underwriting Income (Loss)

186

142

106

281

248

Ratios After Dividends to Policyholders:

Loss

58.8

63.8

7.3

3.6

52.7

56.6

Expense

27.9

26.8

36.6

34.8

29.0

27.8

Combined

86.7

90.6

43.9

38.4

81.7

84.4

Premiums Written as a % of Total

20.4

2.8

2.9

23.2

23.3

Page 8 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009
(DOLLARS IN MILLIONS)


	Total						Reinsurance						Worldwide
	Insurance						Assumed						Total
	2010			2009			2010			2009			2010			2009
Net Premiums Written	$	5,646		$	5,576		$	5		$	13		$	5,651		$	5,589
Decrease (Increase) in Unearned Premiums		(73	)		47			3			18			(70	)		65


Net Premiums Earned		5,573			5,623			8			31			5,581			5,654


Net Losses Paid		3,053			2,932			65			84			3,118			3,016
Increase (Decrease) in Outstanding Losses		345			269			(73	)		(98	)		272			171


Net Losses Incurred		3,398			3,201			(8	)		(14	)		3,390			3,187


Expenses Incurred		1,749			1,695			2			5			1,751			1,700

Dividends Incurred		16			15			—			—			16			15


Statutory Underwriting Income (Loss)	$	410		$	712		$	14		$	40			424			752


Increase in Deferred Acquisition Costs														43			20


GAAP Underwriting Income													$	467		$	772


Ratios After Dividends to Policyholders:

Loss		61.1	%		57.1	%		*	%		*	%		60.9	%		56.5	%
Expense		31.1			30.5			*			*			31.1			30.5


Combined		92.2	%		87.6	%		*	%		*	%		92.0	%		87.0	%


Premiums Written as a % of Total		99.9	%		99.8	%		0.1	%		0.2	%		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 SIX MONTHS ENDED JUNE 30, 2010 AND 2009
(DOLLARS IN MILLIONS)

Outside

the

Worldwide

United States

Total

2010

2009

2010

2009

2010

2009

(Revised)

Net Premiums Written

4,147

4,266

1,504

1,323

5,651

5,589

Decrease (Increase) in Unearned Premiums

142

(96

)

(77

)

(70

)

Net Premiums Earned

4,173

4,408

1,408

1,246

5,581

5,654

Net Losses Paid

2,466

2,486

652

530

3,118

3,016

Increase (Decrease) in Outstanding Losses

238

)

176

272

171

Net Losses Incurred

2,704

2,481

686

706

3,390

3,187

Expenses Incurred

1,223

1,231

528

469

1,751

1,700

Dividends Incurred

—

Statutory Underwriting Income (Loss)

230

681

194

424

752

Increase in Deferred Acquisition Costs

GAAP Underwriting Income

467

772

Ratios After Dividends to Policyholders:

Loss

65.0

56.5

48.7

56.7

60.9

56.5

Expense

29.6

29.0

35.1

35.4

31.1

30.5

Combined

94.6

85.5

83.8

92.1

92.0

87.0

Premiums Written as a % of Total

73.4

76.3

26.6

23.7

100.0

The Net Losses Incurred amounts have been revised from those originally reported to reflect a reclassification between the United States results and the Outside the United States results. This reclassification had no impact on Worldwide Total results.

Page 10 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2010 AND 2009
(DOLLARS IN MILLIONS)


	Personal												Other						Total
	Automobile						Homeowners						Personal						Personal
	2010			2009			2010			2009			2010			2009			2010			2009
Net Premiums Written	$	168		$	147		$	647		$	637		$	193		$	177		$	1,008		$	961
Decrease (Increase) in Unearned Premiums		(14	)		(5	)		(60	)		(45	)		(1	)		6			(75	)		(44	)


Net Premiums Earned		154			142			587			592			192			183			933			917


Net Losses Paid		97			82			429			303			121			94			647			479
Increase (Decrease) in Outstanding Losses		(3	)		6			(63	)		(12	)		(12	)		14			(78	)		8


Net Losses Incurred		94			88			366			291			109			108			569			487


Expenses Incurred		49			42			208			201			65			56			322			299

Dividends Incurred		—			—			—			—			—			—			—			—


Statutory Underwriting Income	$	11		$	12		$	13		$	100		$	18		$	19		$	42		$	131


Ratios After Dividends to Policyholders:

Loss		61.0	%		62.0	%		62.4	%		49.2	%		56.8	%		59.0	%		61.0	%		53.1	%
Expense		29.2			28.5			32.1			31.5			33.7			31.7			31.9			31.1


Combined		90.2	%		90.5	%		94.5	%		80.7	%		90.5	%		90.7	%		92.9	%		84.2	%


Premiums Written as a % of Total		5.8	%		5.2	%		22.4	%		22.3	%		6.7	%		6.2	%		34.9	%		33.7	%

Page 11 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2010 AND 2009
(DOLLARS IN MILLIONS)


													Commercial						Commercial
	Commercial						Commercial						Workers’						Property						Total
	Multiple Peril						Casualty						Compensation						and Marine						Commercial
	2010			2009			2010			2009			2010			2009			2010			2009			2010			2009
Net Premiums Written	$	286		$	292		$	398		$	406		$	187		$	188		$	338		$	327		$	1,209		$	1,213
Decrease (Increase) in Unearned Premiums		1			(3	)		(21	)		(13	)		(4	)		15			(21	)		(17	)		(45	)		(18	)


Net Premiums Earned		287			289			377			393			183			203			317			310			1,164			1,195


Net Losses Paid		130			122			198			202			108			103			163			183			599			610
Increase (Decrease) in Outstanding Losses		40			4			41			52			8			29			24			(6	)		113			79


Net Losses Incurred		170			126			239			254			116			132			187			177			712			689


Expenses Incurred		103			106			110			114			47			46			118			112			378			378

Dividends Incurred		—			—			—			—			6			5			—			—			6			5


Statutory Underwriting Income	$	14		$	57		$	28		$	25		$	14		$	20		$	12		$	21		$	68		$	123


Ratios After Dividends to Policyholders:

Loss		59.2	%		43.6	%		63.4	%		64.6	%		65.5	%		66.7	%		59.0	%		57.1	%		61.5	%		57.9	%
Expense		36.0			36.3			27.6			28.1			26.0			25.1			34.9			34.3			31.4			31.3


Combined		95.2	%		79.9	%		91.0	%		92.7	%		91.5	%		91.8	%		93.9	%		91.4	%		92.9	%		89.2	%


Premiums Written as a % of Total		9.9	%		10.3	%		13.8	%		14.3	%		6.5	%		6.6	%		11.7	%		11.5	%		41.9	%		42.7	%

Page 12 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2010 AND 2009
(DOLLARS IN MILLIONS)


	Professional												Total
	Liability						Surety						Specialty
	2010			2009			2010			2009			2010			2009
Net Premiums Written	$	583		$	584		$	83		$	85		$	666		$	669
Decrease (Increase) in Unearned Premiums		29			34			3			2			32			36


Net Premiums Earned		612			618			86			87			698			705


Net Losses Paid		407			370			3			6			410			376
Increase (Decrease) in Outstanding Losses		(41	)		29			7			(3	)		(34	)		26


Net Losses Incurred		366			399			10			3			376			402


Expenses Incurred		160			149			29			29			189			178

Dividends Incurred		—			—			2			2			2			2


Statutory Underwriting Income	$	86		$	70		$	45		$	53		$	131		$	123


Ratios After Dividends to Policyholders:

Loss		59.8	%		64.6	%		11.9	%		3.5	%		54.0	%		57.2	%
Expense		27.4			25.5			35.8			35.0			28.5			26.7


Combined		87.2	%		90.1	%		47.7	%		38.5	%		82.5	%		83.9	%


Premiums Written as a % of Total		20.2	%		20.5	%		2.9	%		3.0	%		23.1	%		23.5	%

Page 13 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2010 AND 2009
(DOLLARS IN MILLIONS)


	Total						Reinsurance						Worldwide
	Insurance						Assumed						Total
	2010			2009			2010			2009			2010			2009
Net Premiums Written	$	2,883		$	2,843		$	3		$	3		$	2,886		$	2,846
Decrease (Increase) in Unearned Premiums		(88	)		(26	)		1			8			(87	)		(18	)


Net Premiums Earned		2,795			2,817			4			11			2,799			2,828


Net Losses Paid		1,656			1,465			30			42			1,686			1,507
Increase (Decrease) in Outstanding Losses		1			113			(27	)		(48	)		(26	)		65


Net Losses Incurred		1,657			1,578			3			(6	)		1,660			1,572


Expenses Incurred		889			855			—			2			889			857

Dividends Incurred		8			7			—			—			8			7


Statutory Underwriting Income	$	241		$	377		$	1		$	15			242			392


Increase in Deferred Acquisition Costs														21			4


GAAP Underwriting Income													$	263		$	396


Ratios After Dividends to Policyholders:

Loss		59.5	%		56.2	%		*	%		*	%		59.5	%		55.7	%
Expense		30.9			30.1			*			*			30.9			30.2


Combined		90.4	%		86.3	%		*	%		*	%		90.4	%		85.9	%


Premiums Written as a % of Total		99.9	%		99.9	%		0.1	%		0.1	%		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 JUNE 30, 2010 AND 2009
(DOLLARS IN MILLIONS)

Outside

the

Worldwide

United States

Total

2010

2009

2010

2009

2010

2009

Net Premiums Written

2,199

2,229

687

617

2,886

2,846

Decrease (Increase) in Unearned Premiums

(122

)

(48

)

(87

)

(18

)

Net Premiums Earned

2,077

2,181

722

647

2,799

2,828

Net Losses Paid

1,360

1,238

326

269

1,686

1,507

Increase (Decrease) in Outstanding Losses

(15

)

(34

)

(11

)

(26

)

Net Losses Incurred

1,345

1,204

315

368

1,660

1,572

Expenses Incurred

634

631

255

226

889

857

Dividends Incurred

—

Statutory Underwriting Income

339

152

242

392

Increase in Deferred Acquisition Costs

GAAP Underwriting Income

263

396

Ratios After Dividends to Policyholders:

Loss

65.0

55.4

43.6

56.9

59.5

55.7

Expense

28.9

28.4

37.1

36.6

30.9

30.2

Combined

93.9

83.8

80.7

93.5

90.4

85.9

Premiums Written as a % of Total

76.2

78.3

23.8

21.7

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 June 30
	Second Quarter						Six Months
	2010			2009			2010			2009
				(dollars in millions)
Annualized Net Income	$	2,072		$	2,204		$	1,964		$	1,784
Average Shareholders’ Equity	$	15,637		$	14,154		$	15,636		$	13,913

Return on Equity		13.3	%		15.6	%		12.6	%		12.8	%

Annualized Operating Income	$	1,840		$	2,132		$	1,682		$	2,094
Average Shareholders’ Equity Excluding Unrealized Appreciation	$	14,455		$	13,896		$	14,500		$	13,789

Operating Return on Equity		12.7	%		15.3	%		11.6	%		15.2	%

Page 17 of 17

Attached files

CHUBB CORP Reports

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