CHUBB CORP - FORM 8-K - EX-99.2

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8-K - FORM 8-K - CHUBB CORP	y93121e8vk.htm
EX-99.1 - EX-99.1 - CHUBB CORP	y93121exv99w1.htm

Exhibit 99.2


The	Supplementary	September 30, 2011
Chubb	Investor
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
SUPPLEMENTARY INVESTOR INFORMATION
TABLE OF CONTENTS
SEPTEMBER 30, 2011


	Page
The Chubb Corporation:
Consolidated Balance Sheet Highlights		1
Share Repurchase Activity		2

Summary of Invested Assets:
Corporate		3
Property and Casualty		3

Investment Income After Taxes:
Corporate		4
Property and Casualty		4

Property and Casualty Insurance Group:
Statutory Policyholders’ Surplus		4
Change in Net Unpaid Losses		5
Underwriting Results — Year-To-Date		6-10
Underwriting Results — Quarterly		11-15

Definitions of Key Terms		16-17

THE CHUBB CORPORATION

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(in millions, except per share amounts)


	Sept. 30						Dec. 31
	2011						2010
				% of Total						% of Total
Invested Assets (at carrying value)
Short Term Investments	$	2,289			5	%	$	1,905			4	%
Fixed Maturities
Tax Exempt		20,134			47			19,774			47
Taxable		17,271			40			16,745			40
Equity Securities		1,366			3			1,550			4
Other Invested Assets		2,313			5			2,239			5

Total Invested Assets	$	43,373			100	%	$	42,213			100	%


Unrealized Appreciation of Investments
Fixed Maturities	$	2,189					$	1,458
Equity Securities		95						265

		2,284						1,723
Deferred Income Tax Liability		799						603

	$	1,485					$	1,120


Capitalization
Long Term Debt	$	3,975					$	3,975
Shareholders’ Equity		15,638						15,530

Total Capitalization	$	19,613					$	19,505


Debt as a Percentage of Total Capitalization		20.3	%					20.4	%

Actual Common Shares Outstanding		278.1						297.3

Book Value Per Common Share	$	56.23					$	52.24

Book Value Per Common Share, with Available-for-Sale Fixed Maturities at Amortized Cost	$	51.11					$	49.05

Page 1 of 17

THE CHUBB CORPORATION

SHARE REPURCHASE ACTIVITY

(dollars in millions, except per share amounts)


	Periods Ended September 30
	Third		Nine		From
	Quarter		Months		December 2005
	2011		2011		to September 30, 2011
Cost of Shares Repurchased		$480		$1,322		$9,282

Average Cost Per Share		$59.97		$61.24		$52.12

Shares Repurchased		7,997,173		21,587,016		178,094,720

During the period from December 2005 through September 2010, under several share repurchase authorizations the Board of Directors authorized the repurchase of a total of 155 million shares of the Corporation’s common stock. No shares remain under these repurchase authorizations.

In December 2010, the Board of Directors authorized the repurchase of up to 30,000,000 shares of the Corporation’s common stock. The authorization has no expiration date. As of September 30, 2011, 6,905,280 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)
	Sept. 30		Dec. 31		Sept. 30		Dec. 31
	2011		2010		2011		2010
			(in millions)
Short Term Investments	$	1,322	$	817	$	1,322	$	817
Taxable Fixed Maturities		1,052		1,154		1,084		1,197
Equity Securities		200		205		145		171
Other Invested Assets		14		23		14		23


TOTAL	$	2,588	$	2,199	$	2,565	$	2,208

PROPERTY AND CASUALTY


	Cost or				Carrying
	Amortized Cost				Value (a)
	Sept. 30		Dec. 31		Sept. 30		Dec. 31
	2011		2010		2011		2010
			(in millions)
Short Term Investments	$	967	$	1,088	$	967	$	1,088
Fixed Maturities
Tax Exempt		18,879		19,072		20,134		19,774
Taxable		15,285		14,835		16,187		15,548
Equity Securities		1,071		1,080		1,221		1,379
Other Invested Assets		2,299		2,216		2,299		2,216


TOTAL	$	38,501	$	38,291	$	40,808	$	40,005


(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 September 30
	Third Quarter						Nine Months
	2011			2010			2011			2010
				(in millions)
CORPORATE INVESTMENT INCOME	$	7		$	8		$	21		$	38


PROPERTY AND CASUALTY INVESTMENT INCOME
Tax Exempt Interest	$	190		$	190		$	575		$	569
Taxable Interest		119			116			352			351
Other		17			16			41			37
Investment Expenses		(5	)		(5	)		(19	)		(16	)


TOTAL	$	321		$	317		$	949		$	941


Effective Tax Rate		18.9	%		18.7	%		19.0	%		19.0	%

After-Tax Annualized Yield		3.28	%		3.32	%		3.24	%		3.28	%

After-tax annualized yield is based on the average invested assets for the periods presented, with fixed maturities at amortized cost and equity securities at fair value.

STATUTORY POLICYHOLDERS’ SURPLUS

Sept. 30

Dec. 31

Sept. 30

2011

2010

(in millions)

Estimated Statutory Policyholders’ Surplus

$13,950

$14,539

$14,525

Rolling Year Statutory Net Premiums Written

$11,675

$11,262

$11,185

Ratio of Statutory Net Premiums Written to Policyholders’ Surplus

0.84:1

0.77:1

Statutory Policyholders’ Surplus and Net Premiums Written include all domestic and foreign property and casualty subsidiaries.

Page 4 of 17

THE CHUBB CORPORATION

PROPERTY AND CASUALTY

CHANGE IN NET UNPAID LOSSES
NINE MONTHS ENDED SEPTEMBER 30, 2011


											All Other
	Net Unpaid Losses							IBNR			Unpaid Losses
					Increase			Increase			Increase
	9/30/11		12/31/10		(Decrease)			(Decrease)			(Decrease)
					(in millions)
Personal Insurance
Automobile	$	418	$	395	$	23		$	3		$	20
Homeowners		965		692		273			207			66
Other		897		877		20			2			18

Total Personal		2,280		1,964		316			212			104

Commercial Insurance
Multiple Peril		1,827		1,705		122			78			44
Casualty		6,265		6,141		124			159			(35	)
Workers’ Compensation		2,352		2,234		118			89			29
Property and Marine		1,140		819		321			167			154

Total Commercial		11,584		10,899		685			493			192

Specialty Insurance
Professional Liability		7,351		7,388		(37	)		(72	)		35
Surety		69		58		11			—			11

Total Specialty		7,420		7,446		(26	)		(72	)		46

Total Insurance		21,284		20,309		975			633			342
Reinsurance Assumed		500		592		(92	)		(77	)		(15	)


Total	$	21,784	$	20,901	$	883		$	556		$	327

Page 5 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010
(DOLLARS IN MILLIONS)

Personal

Other

Total

Automobile

Homeowners

Personal

2011

2010

2011

2010

2011

2010

2011

2010

Net Premiums Written

517

474

1,872

1,795

597

593

2,986

2,862

Decrease (Increase) in Unearned Premiums

(17

)

(16

)

(47

)

(24

)

(22

)

(62

)

(62

)

Net Premiums Earned

500

458

1,825

1,771

599

571

2,924

2,800

Net Losses Paid

299

281

1,050

1,066

334

331

1,683

1,678

Increase (Decrease) in Outstanding Losses

)

267

)

300

Net Losses Incurred

319

280

1,317

1,117

347

327

1,983

1,724

Expenses Incurred

160

142

637

593

228

198

1,025

933

Dividends Incurred

—

Statutory Underwriting Income (Loss)

(129

)

(84

)

143

Ratios After Dividends to Policyholders:

Loss

63.8

61.1

72.2

63.1

57.9

57.3

67.9

61.6

Expense

31.0

30.0

34.0

33.0

38.2

33.4

34.3

32.6

Combined

94.8

91.1

106.2

96.1

90.7

102.2

94.2

Premiums Written as a % of Total

5.9

5.6

21.3

21.4

6.8

7.1

34.0

34.1

Page 6 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010
(DOLLARS IN MILLIONS)

Commercial

Workers’

Property

Total

Multiple Peril

Casualty

Compensation

and Marine

Commercial

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

Net Premiums Written

852

817

1,247

1,162

662

586

1,058

969

3,819

3,534

Decrease (Increase) in Unearned Premiums

)

(32

)

(18

)

(46

)

(36

)

(45

)

(21

)

(127

)

(59

)

Net Premiums Earned

848

833

1,215

1,144

616

550

1,013

948

3,692

3,475

Net Losses Paid

479

407

631

584

299

291

548

466

1,957

1,748

Increase (Decrease) in Outstanding Losses

118

133

117

311

624

338

Net Losses Incurred

597

501

709

717

416

359

859

509

2,581

2,086

Expenses Incurred

320

303

353

333

146

141

362

333

1,181

1,110

Dividends Incurred

—

Statutory Underwriting Income (Loss)

(69

)

153

(208

)

106

(90

)

262

Ratios After Dividends to Policyholders:

Loss

70.4

60.1

58.4

62.6

69.8

67.3

84.8

53.7

70.3

60.3

Expense

37.6

37.1

28.3

28.7

22.7

24.8

34.2

34.4

31.1

31.6

Combined

108.0

97.2

86.7

91.3

92.5

92.1

119.0

88.1

101.4

91.9

Premiums Written as a % of Total

9.7

14.2

13.9

7.5

7.0

12.0

11.6

43.4

42.2

Page 7 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010
(DOLLARS IN MILLIONS)

Professional

Total

Liability

Surety

Specialty

2011

2010

2011

2010

2011

2010

Net Premiums Written

1,740

1,735

244

246

1,984

1,981

Decrease (Increase) in Unearned Premiums

104

)

112

Net Premiums Earned

1,835

1,839

242

254

2,077

2,093

Net Losses Paid

1,202

1,165

1,227

1,179

Increase (Decrease) in Outstanding Losses

(115

)

(66

)

(104

)

(63

)

Net Losses Incurred

1,087

1,099

1,123

1,116

Expenses Incurred

499

482

583

568

Dividends Incurred

—

Statutory Underwriting Income (Loss)

249

258

119

146

368

404

Ratios After Dividends to Policyholders:

Loss

59.2

59.7

15.0

6.8

54.2

53.5

Expense

28.7

27.8

34.9

35.7

29.4

28.7

Combined

87.9

87.5

49.9

42.5

83.6

82.2

Premiums Written as a % of Total

19.8

20.7

2.8

2.9

22.6

23.6

Page 8 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010
(DOLLARS IN MILLIONS)


	Total						Reinsurance						Worldwide
	Insurance						Assumed						Total
	2011			2010			2011			2010			2011			2010
Net Premiums Written	$	8,789		$	8,377		$	4		$	6		$	8,793		$	8,383
Decrease (Increase) in Unearned Premiums		(96	)		(9	)		2			5			(94	)		(4	)


Net Premiums Earned		8,693			8,368			6			11			8,699			8,379


Net Losses Paid		4,867			4,605			71			94			4,938			4,699
Increase (Decrease) in Outstanding Losses		820			321			(92	)		(108	)		728			213


Net Losses Incurred		5,687			4,926			(21	)		(14	)		5,666			4,912


Expenses Incurred		2,789			2,611			1			4			2,790			2,615

Dividends Incurred		23			22			—			—			23			22


Statutory Underwriting Income	$	194		$	809		$	26		$	21			220			830


Increase in Deferred Acquisition Costs														70			36


GAAP Underwriting Income													$	290		$	866


Ratios After Dividends to Policyholders:

Loss		65.6	%		59.0	%		*	%		*	%		65.3	%		58.8	%
Expense		31.8			31.3			*			*			31.8			31.3


Combined		97.4	%		90.3	%		*	%		*	%		97.1	%		90.1	%


Premiums Written as a % of Total		100.0	%		99.9	%		0.0	%		0.1	%		100.0	%		100.0	%


*		Combined, loss and expense ratios are no longer presented for Reinsurance Assumed since this business is in runoff.

Page 9 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010
(DOLLARS IN MILLIONS)

Outside

the

Worldwide

United States

Total

2011

2010

2011

2010

2011

2010

Net Premiums Written

6,349

6,229

2,444

2,154

8,793

8,383

Decrease (Increase) in Unearned Premiums

(56

)

(38

)

(25

)

(94

)

Net Premiums Earned

6,293

6,250

2,406

2,129

8,699

8,379

Net Losses Paid

3,791

3,722

1,147

977

4,938

4,699

Increase (Decrease) in Outstanding Losses

524

182

204

728

213

Net Losses Incurred

4,315

3,904

1,351

1,008

5,666

4,912

Expenses Incurred

1,889

1,848

901

767

2,790

2,615

Dividends Incurred

—

Statutory Underwriting Income

476

154

354

220

830

Increase in Deferred Acquisition Costs

GAAP Underwriting Income

290

866

Ratios After Dividends to Policyholders:

Loss

68.8

62.7

56.2

47.3

65.3

58.8

Expense

29.9

29.8

36.9

35.6

31.8

31.3

Combined

98.7

92.5

93.1

82.9

97.1

90.1

Premiums Written as a % of Total

72.2

74.2

27.8

25.8

100.0

Page 10 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED SEPTEMBER 30, 2011 AND 2010
(DOLLARS IN MILLIONS)


	Personal												Other						Total
	Automobile						Homeowners						Personal						Personal
	2011			2010			2011			2010			2011			2010			2011			2010
Net Premiums Written	$	174		$	160		$	658		$	631		$	197		$	189		$	1,029		$	980
Decrease (Increase) in Unearned Premiums		(4	)		(6	)		(43	)		(37	)		5			5			(42	)		(38	)


Net Premiums Earned		170			154			615			594			202			194			987			942


Net Losses Paid		106			90			388			361			101			111			595			562
Increase (Decrease) in Outstanding Losses		10			5			182			(71	)		13			3			205			(63	)


Net Losses Incurred		116			95			570			290			114			114			800			499


Expenses Incurred		54			48			220			203			81			67			355			318

Dividends Incurred		—			—			—			—			—			—			—			—


Statutory Underwriting Income (Loss)	$	—		$	11		$	(175	)	$	101		$	7		$	13		$	(168	)	$	125


Ratios After Dividends to Policyholders:

Loss		68.3	%		61.7	%		92.7	%		48.8	%		56.5	%		58.8	%		81.1	%		53.0	%
Expense		31.0			30.0			33.4			32.2			41.1			35.4			34.5			32.4


Combined		99.3	%		91.7	%		126.1	%		81.0	%		97.6	%		94.2	%		115.6	%		85.4	%


Premiums Written as a % of Total		6.0	%		5.9	%		22.9	%		23.1	%		6.8	%		6.9	%		35.7	%		35.9	%

Page 11 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED SEPTEMBER 30, 2011 AND 2010
(DOLLARS IN MILLIONS)


													Commercial						Commercial
	Commercial						Commercial						Workers’						Property						Total
	Multiple Peril						Casualty						Compensation						and Marine						Commercial
	2011			2010			2011			2010			2011			2010			2011			2010			2011			2010
Net Premiums Written	$	290		$	277		$	392		$	350		$	199		$	177		$	302		$	278		$	1,183		$	1,082
Decrease (Increase) in Unearned Premiums		(9	)		—			18			31			14			4			43			42			66			77


Net Premiums Earned		281			277			410			381			213			181			345			320			1,249			1,159


Net Losses Paid		173			148			198			211			92			90			219			164			682			613
Increase (Decrease) in Outstanding Losses		(6	)		(13	)		61			33			52			31			63			(15	)		170			36


Net Losses Incurred		167			135			259			244			144			121			282			149			852			649


Expenses Incurred		105			99			115			108			48			46			115			102			383			355

Dividends Incurred		—			—			—			—			6			4			—			—			6			4


Statutory Underwriting Income (Loss)	$	9		$	43		$	36		$	29		$	15		$	10		$	(52	)	$	69		$	8		$	151


Ratios After Dividends to Policyholders:

Loss		59.4	%		48.8	%		63.2	%		64.0	%		69.5	%		68.4	%		81.7	%		46.6	%		68.6	%		56.2	%
Expense		36.2			35.7			29.3			30.9			24.9			26.6			38.1			36.7			32.5			32.9


Combined		95.6	%		84.5	%		92.5	%		94.9	%		94.4	%		95.0	%		119.8	%		83.3	%		101.1	%		89.1	%


Premiums Written as a % of Total		10.1	%		10.1	%		13.6	%		12.8	%		6.9	%		6.5	%		10.5	%		10.2	%		41.1	%		39.6	%

Page 12 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED SEPTEMBER 30, 2011 AND 2010
(DOLLARS IN MILLIONS)


	Professional												Total
	Liability						Surety						Specialty
	2011			2010			2011			2010			2011			2010
Net Premiums Written	$	594		$	582		$	71		$	87		$	665		$	669
Decrease (Increase) in Unearned Premiums		21			25			7			—			28			25


Net Premiums Earned		615			607			78			87			693			694


Net Losses Paid		420			371			10			6			430			377
Increase (Decrease) in Outstanding Losses		(22	)		4			3			(1	)		(19	)		3


Net Losses Incurred		398			375			13			5			411			380


Expenses Incurred		165			160			27			29			192			189

Dividends Incurred		—			—			1			2			1			2


Statutory Underwriting Income (Loss)	$	52		$	72		$	37		$	51		$	89		$	123


Ratios After Dividends to Policyholders:

Loss		64.7	%		61.8	%		16.9	%		5.9	%		59.4	%		54.9	%
Expense		27.8			27.5			38.6			34.1			28.9			28.4


Combined		92.5	%		89.3	%		55.5	%		40.0	%		88.3	%		83.3	%


Premiums Written as a % of Total		20.6	%		21.3	%		2.5	%		3.2	%		23.1	%		24.5	%

Page 13 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED SEPTEMBER 30, 2011 AND 2010
(DOLLARS IN MILLIONS)


	Total						Reinsurance						Worldwide
	Insurance						Assumed						Total
	2011			2010			2011			2010			2011			2010
Net Premiums Written	$	2,877		$	2,731		$	2		$	1		$	2,879		$	2,732
Decrease (Increase) in Unearned Premiums		52			64			1			2			53			66


Net Premiums Earned		2,929			2,795			3			3			2,932			2,798


Net Losses Paid		1,707			1,552			21			29			1,728			1,581
Increase (Decrease) in Outstanding Losses		356			(24	)		(30	)		(35	)		326			(59	)


Net Losses Incurred		2,063			1,528			(9	)		(6	)		2,054			1,522


Expenses Incurred		930			862			1			2			931			864

Dividends Incurred		7			6			—			—			7			6


Statutory Underwriting Income (Loss)	$	(71	)	$	399		$	11		$	7			(60	)		406


Increase (Decrease) in Deferred Acquisition Costs														13			(7	)


GAAP Underwriting Income (Loss)													$	(47	)	$	399


Ratios After Dividends to Policyholders:

Loss		70.6	%		54.8	%		*	%		*	%		70.2	%		54.5	%
Expense		32.4			31.6			*			*			32.4			31.7


Combined		103.0	%		86.4	%		*	%		*	%		102.6	%		86.2	%


Premiums Written as a % of Total		99.9	%		100.0	%		0.1	%		0.0	%		100.0	%		100.0	%


*		Combined, loss and expense ratios are no longer presented for Reinsurance Assumed since this business is in runoff.

Page 14 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED SEPTEMBER 30, 2011 AND 2010
(DOLLARS IN MILLIONS)


							Outside
							the						Worldwide
	United States						United States						Total
	2011			2010			2011			2010			2011			2010
Net Premiums Written	$	2,116		$	2,082		$	763		$	650		$	2,879		$	2,732
Decrease (Increase) in Unearned Premiums		(16	)		(5	)		69			71			53			66


Net Premiums Earned		2,100			2,077			832			721			2,932			2,798


Net Losses Paid		1,363			1,256			365			325			1,728			1,581
Increase (Decrease) in Outstanding Losses		278			(56	)		48			(3	)		326			(59	)


Net Losses Incurred		1,641			1,200			413			322			2,054			1,522


Expenses Incurred		628			625			303			239			931			864

Dividends Incurred		7			6			—			—			7			6


Statutory Underwriting Income (Loss)	$	(176	)	$	246		$	116		$	160			(60	)		406


Increase (Decrease) in Deferred Acquisition Costs														13			(7	)


GAAP Underwriting Income (Loss)													$	(47	)	$	399


Ratios After Dividends to Policyholders:

Loss		78.4	%		57.9	%		49.6	%		44.7	%		70.2	%		54.5	%
Expense		29.8			30.1			39.7			36.8			32.4			31.7


Combined		108.2	%		88.0	%		89.3	%		81.5	%		102.6	%		86.2	%


Premiums Written as a % of Total		73.5	%		76.2	%		26.5	%		23.8	%		100.0	%		100.0	%

Page 15 of 17

THE CHUBB CORPORATION

Definitions of Key Terms

Underwriting Income (Loss)

Management evaluates underwriting results separately from investment results. The underwriting operations consist of four separate business units: personal insurance, commercial insurance, specialty insurance and reinsurance assumed. Performance of the business units is measured based on statutory underwriting results. Statutory accounting principles applicable to property and casualty insurance companies differ in certain respects from generally accepted accounting principles (GAAP). Under statutory accounting principles, policy acquisition and other underwriting expenses are recognized immediately, not at the time premiums are earned. Statutory underwriting income (loss) is arrived at by reducing premiums earned by losses and loss expenses incurred and statutory underwriting expenses incurred.

Management uses underwriting results determined in accordance with GAAP, among other measures, to assess the overall performance of the underwriting operations. To convert statutory underwriting results to a GAAP basis, policy acquisition expenses are deferred and amortized over the period in which the related premiums are earned. Underwriting income (loss) determined in accordance with GAAP is defined as premiums earned less losses and loss expenses incurred and GAAP underwriting expenses incurred.

Property and Casualty Investment Income After Income Tax

Management uses property and casualty investment income after income tax, a non-GAAP financial measure, to evaluate its investment performance because it reflects the impact of any change in the proportion of the investment portfolio invested in tax exempt securities and is therefore more meaningful for analysis purposes than investment income before income taxes.

Book Value per Common Share with Available-for-Sale Fixed Maturities at Amortized Cost

Book value per common share represents the portion of consolidated shareholders’ equity attributable to one share of common stock outstanding as of the balance sheet date. Consolidated shareholders’ equity includes, as part of accumulated other comprehensive income (loss), the after-tax appreciation or depreciation, including unrealized other-than-temporary impairment losses, of the Corporation’s available-for-sale fixed maturities, which are carried at fair value. The appreciation or depreciation of available-for-sale fixed maturities is subject to fluctuation due to changes in interest rates and therefore could distort the analysis of trends. Management believes that book value per common share with available-for-sale fixed maturities at amortized cost, a non-GAAP financial measure, is an important measure of the underlying equity attributable to one share of common stock.

Combined Loss and Expense Ratio or Combined Ratio

The combined loss and expense ratio, expressed as a percentage, is the key measure of underwriting profitability. Management uses the combined loss and expense ratio calculated in accordance with statutory accounting principles applicable to property and casualty insurance companies to evaluate the performance of the underwriting operations. It is the sum of the ratio of losses and loss expenses to premiums earned (loss ratio) plus the ratio of statutory underwriting expenses to premiums written (expense ratio) after reducing both premium amounts by dividends to policyholders.

Page 16 of 17

THE CHUBB CORPORATION

Definitions of Key Terms

Operating Income

Operating income, a non-GAAP financial measure, is net income excluding after-tax realized investment gains and losses. Management uses operating income, among other measures, to evaluate its performance because the realization of investment gains and losses in any given period is largely discretionary as to timing and can fluctuate significantly, which could distort the analysis of trends.

Return on Equity and Operating Return on Equity

Return on equity is the ratio of annualized net income divided by average shareholders’ equity. Average shareholders’ equity is the average of the beginning and all quarter-end balances within the period.

Operating return on equity, a non-GAAP measure, is the ratio of annualized operating income divided by average shareholders’ equity excluding the after-tax unrealized appreciation or depreciation of investments. Consolidated shareholders’ equity includes, as part of accumulated other comprehensive income (loss), the after-tax appreciation or depreciation, including unrealized other-than-temporary impairment losses, of the Corporation’s available-for-sale fixed maturities and equity securities, which are carried at fair value. The appreciation or depreciation of available-for-sale fixed maturities and equity securities is subject to fluctuation and could distort the analysis of trends. Average shareholders’ equity excluding the after-tax unrealized appreciation or depreciation of investments is the average of the beginning and all quarter-end balances within the period. Management uses operating return on equity, among other measures, to assess the overall performance of the Corporation.


	Periods Ended September 30
	Third Quarter						Nine Months
	2011			2010			2011			2010
	(dollars in millions)
Annualized Net Income	$	1,192		$	2,288		$	1,635		$	2,072
Average Shareholders’ Equity	$	15,715		$	15,756		$	15,635		$	15,722

Return on Equity		7.6	%		14.5	%		10.5	%		13.2	%

Annualized Operating Income	$	1,008		$	2,148		$	1,375		$	1,837
Average Shareholders’ Equity Excluding Unrealized Appreciation or Depreciation	$	14,296		$	14,315		$	14,379		$	14,452

Operating Return on Equity		7.1	%		15.0	%		9.6	%		12.7	%

Page 17 of 17

CHUBB CORP - FORM 8-K - EX-99.2 - October 20, 2011

Attached files

CHUBB CORP Reports