Exhibit 99.2

 

The		Supplementary		June 30, 2012
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.

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THE CHUBB CORPORATION

Adoption of New Accounting Pronouncement

Shareholders’ equity and book value per common share at December 31, 2011 and return on equity and operating return on equity for the second quarter and six months ended June 30, 2011 have been adjusted to reflect the adoption of new guidance issued by the Financial Accounting Standards Board related to the accounting for costs associated with acquiring or renewing insurance contracts. The adoption of this guidance decreased shareholders’ equity by $273 million as of December 31, 2010 and 2011 and each of the quarter-end balances within 2011. The effect of the adoption of the new guidance on net income for the second quarter and six months ended June 30, 2012 and June 30, 2011 was not material.

 

 

 

 

 

 

(i)

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THE CHUBB CORPORATION

SUPPLEMENTARY INVESTOR INFORMATION

TABLE OF CONTENTS

JUNE 30, 2012

 

		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

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THE CHUBB CORPORATION

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(in millions, except per share amounts)

 

		June 30 2012								Dec. 31 2011
						% of Total								% of Total
										(As Adjusted)
Invested Assets (at carrying value)
Short Term Investments		$	2,012				4	%		$	1,893				4	%
Fixed Maturities
Tax Exempt			20,260				47				20,211				47
Taxable			17,253				40				16,973				40
Equity Securities			1,583				4				1,512				4
Other Invested Assets			2,059				5				2,180				5
Total Invested Assets		$	43,167				100	%		$	42,769				100	%
Unrealized Appreciation of Investments
Fixed Maturities		$	2,538							$	2,422
Equity Securities			322								248
			2,860								2,670
Deferred Income Tax Liability			1,001								934
		$	1,859							$	1,736
Capitalization
Long Term Debt		$	3,575							$	3,575
Shareholders’ Equity			15,561								15,301
Total Capitalization		$	19,136							$	18,876
Debt as a Percentage of Total Capitalization			18.7	%							18.9	%
Actual Common Shares Outstanding			265.8								272.5
Book Value Per Common Share		$	58.54							$	56.15
Book Value Per Common Share, with Available-for-Sale Fixed Maturities at Amortized Cost		$	52.34							$	50.37

 

Page 1 of 17

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THE CHUBB CORPORATION

SHARE REPURCHASE ACTIVITY

(dollars in millions, except per share amounts)

 

		Periods Ended June 30
		Second Quarter 2012				Six Months 2012				From December 2005 to June 30, 2012
Cost of Shares Repurchased		$	305			$	606			$	10,284
Average Cost Per Share		$	71.63			$	70.01			$	53.36
Shares Repurchased			4,257,422				8,648,468				192,739,061

During the period from December 2005 through December 2010, under several share repurchase authorizations the Board of Directors authorized the repurchase of a total of 185 million shares of the Corporation’s common stock. No shares remain under these repurchase authorizations.

In January 2012, the Board of Directors authorized the repurchase of up to $1.2 billion of the Corporation’s common stock. The authorization has no expiration date. As of June 30, 2012, approximately $658 million remained under the share repurchase authorization.

 

Page 2 of 17

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THE CHUBB CORPORATION

SUMMARY OF INVESTED ASSETS

CORPORATE

 

 

		Cost or Amortized Cost								Carrying Value (a)
		June 30 2012				Dec. 31 2011				June 30 2012				Dec. 31 2011
		(in millions)
Short Term Investments		$	739			$	1,035			$	739			$	1,035
Taxable Fixed Maturities			1,198				955				1,227				983
Equity Securities			177				200				178				179
Other Invested Assets			26				27				26				27
TOTAL		$	2,140			$	2,217			$	2,170			$	2,224
PROPERTY AND CASUALTY
		Cost or Amortized Cost								Carrying Value (a)
		June 30 2012				Dec. 31 2011				June 30 2012				Dec. 31 2011
		(in millions)
Short Term Investments		$	1,273			$	858			$	1,273			$	858
Fixed Maturities
Tax Exempt			18,779				18,786				20,260				20,211
Taxable			14,998				15,021				16,026				15,990
Equity Securities			1,084				1,064				1,405				1,333
Other Invested Assets			2,033				2,153				2,033				2,153
TOTAL		$	38,167			$	37,882			$	40,997			$	40,545

 

(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 the Corporation’s equity in the net assets of the partnerships.

 

Page 3 of 17

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THE CHUBB CORPORATION

INVESTMENT INCOME AFTER TAXES

 

		Periods Ended June 30
		Second Quarter								Six Months
		2012				2011				2012				2011
		(in millions)
CORPORATE INVESTMENT INCOME		$	4			$	6			$	11			$	14
PROPERTY AND CASUALTY INVESTMENT INCOME
Tax Exempt Interest		$	185			$	193			$	372			$	385
Taxable Interest			110				117				226				233
Other			14				15				26				24
Investment Expenses			(6	)			(7	)			(13	)			(14	)
TOTAL		$	303			$	318			$	611			$	628
Effective Tax Rate			18.8	%			19.3	%			18.9	%			19.0	%
After-Tax Annualized Yield			3.15	%			3.24	%			3.18	%			3.22	%

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 2012				Dec. 31 2011				June 30 2011
		(in millions)
Estimated Statutory Policyholders’ Surplus		$	14,150			$	13,958			$	15,025
Rolling Year Statutory Net Premiums Written		$	11,891			$	11,778			$	11,532
Ratio of Statutory Net Premiums Written to Policyholders’ Surplus			0.84:1				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

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THE CHUBB CORPORATION

PROPERTY AND CASUALTY

CHANGE IN NET UNPAID LOSSES

SIX MONTHS ENDED JUNE 30, 2012

 

		Net Unpaid Losses												IBNR Increase (Decrease)				All Other Unpaid Losses Increase (Decrease)
		6/30/12				12/31/11				Increase (Decrease)
		(in millions)
Personal Insurance
Automobile		$	401			$	404			$	(3	)		$	2			$	(5	)
Homeowners			794				769				25				79				(54	)
Other			898				902				(4	)			31				(35	)
Total Personal			2,093				2,075				18				112				(94	)
Commercial Insurance
Multiple Peril			1,793				1,735				58				53				5
Casualty			6,380				6,274				106				56				50
Workers’ Compensation			2,495				2,392				103				81				22
Property and Marine			1,117				1,118				(1	)			50				(51	)
Total Commercial			11,785				11,519				266				240				26
Specialty Insurance
Professional Liability			7,147				7,180				(33	)			13				(46	)
Surety			76				75				1				3				(2	)
Total Specialty			7,223				7,255				(32	)			16				(48	)
Total Insurance			21,101				20,849				252				368				(116	)
Reinsurance Assumed			429				480				(51	)			(48	)			(3	)
Total		$	21,530			$	21,329			$	201			$	320			$	(119	)

 

Page 5 of 17

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THE CHUBB CORPORATION — WORLDWIDE

PROPERTY AND CASUALTY UNDERWRITING RESULTS

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(DOLLARS IN MILLIONS)

 

		Personal Automobile								Homeowners								Other Personal								Total Personal
		2012				2011				2012				2011				2012				2011				2012				2011
Net Premiums Written		$	349			$	343			$	1,261			$	1,214			$	439			$	400			$	2,049			$	1,957
Decrease (Increase) in Unearned Premiums			(16	)			(13	)			(16	)			(4	)			(13	)			(3	)			(45	)			(20	)
Net Premiums Earned			333				330				1,245				1,210				426				397				2,004				1,937
Net Losses Paid			207				193				608				662				240				233				1,055				1,088
Increase (Decrease) in Outstanding Losses			—				10				26				85				2				—				28				95
Net Losses Incurred			207				203				634				747				242				233				1,083				1,183
Expenses Incurred			105				106				430				417				167				147				702				670
Dividends Incurred			—				—				—				—				—				—				—				—
Statutory Underwriting Income (Loss)		$	21			$	21			$	181			$	46			$	17			$	17			$	219			$	84
Ratios After Dividends to Policyholders:
Loss			62.2	%			61.5	%			50.9	%			61.7	%			56.8	%			58.7	%			54.0	%			61.1	%
Expense			30.0				30.9				34.1				34.4				38.0				36.7				34.3				34.2
Combined			92.2	%			92.4	%			85.0	%			96.1	%			94.8	%			95.4	%			88.3	%			95.3	%
Premiums Written as a % of Total			5.8	%			5.8	%			20.8	%			20.5	%			7.3	%			6.8	%			33.9	%			33.1	%

 

Page 6 of 17

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THE CHUBB CORPORATION — WORLDWIDE

PROPERTY AND CASUALTY UNDERWRITING RESULTS

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(DOLLARS IN MILLIONS)

 

		Commercial Multiple Peril								Commercial Casualty								Commercial Workers’ Compensation								Commercial Property and Marine								Total Commercial
		2012				2011				2012				2011				2012				2011				2012				2011				2012				2011
Net Premiums Written		$	553			$	562			$	870			$	855			$	547			$	463			$	788			$	756			$	2,758			$	2,636
Decrease (Increase) in Unearned Premiums			13				5				(43	)			(50	)			(70	)			(60	)			(67	)			(88	)			(167	)			(193	)
Net Premiums Earned			566				567				827				805				477				403				721				668				2,591				2,443
Net Losses Paid			274				306				412				433				236				207				470				329				1,392				1,275
Increase (Decrease) in Outstanding Losses			61				124				129				17				106				65				3				248				299				454
Net Losses Incurred			335				430				541				450				342				272				473				577				1,691				1,729
Expenses Incurred			209				215				239				238				115				98				254				247				817				798
Dividends Incurred			—				—				—				—				14				14				—				—				14				14
Statutory Underwriting Income (Loss)		$	22			$	(78	)		$	47			$	117			$	6			$	19			$	(6	)		$	(156	)		$	69			$	(98	)
Ratios After Dividends to Policyholders:
Loss			59.2	%			75.8	%			65.4	%			55.9	%			73.9	%			70.0	%			65.6	%			86.4	%			65.6	%			71.2	%
Expense			37.8				38.3				27.5				27.8				21.5				21.8				32.2				32.7				29.8				30.4
Combined			97.0	%			114.1	%			92.9	%			83.7	%			95.4	%			91.8	%			97.8	%			119.1	%			95.4	%			101.6	%
Premiums Written as a % of Total			9.1	%			9.5	%			14.4	%			14.5	%			9.1	%			7.8	%			13.0	%			12.8	%			45.6	%			44.6	%

 

Page 7 of 17

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THE CHUBB CORPORATION — WORLDWIDE

PROPERTY AND CASUALTY UNDERWRITING RESULTS

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(DOLLARS IN MILLIONS)

 

		Professional Liability								Surety								Total Specialty
		2012				2011				2012				2011				2012				2011
Net Premiums Written		$	1,093			$	1,146			$	147			$	173			$	1,240			$	1,319
Decrease (Increase) in Unearned Premiums			86				74				10				(9	)			96				65
Net Premiums Earned			1,179				1,220				157				164				1,336				1,384
Net Losses Paid			796				782				11				15				807				797
Increase (Decrease) in Outstanding Losses			2				(93	)			1				8				3				(85	)
Net Losses Incurred			798				689				12				23				810				712
Expenses Incurred			333				334				60				57				393				391
Dividends Incurred			—				—				2				2				2				2
Statutory Underwriting Income (Loss)		$	48			$	197			$	83			$	82			$	131			$	279
Ratios After Dividends to Policyholders:
Loss			67.7	%			56.5	%			7.7	%			14.2	%			60.7	%			51.5	%
Expense			30.5				29.1				41.4				33.3				31.8				29.7
Combined			98.2	%			85.6	%			49.1	%			47.5	%			92.5	%			81.2	%
Premiums Written as a % of Total			18.1	%			19.4	%			2.4	%			2.9	%			20.5	%			22.3	%

 

Page 8 of 17

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THE CHUBB CORPORATION — WORLDWIDE

PROPERTY AND CASUALTY UNDERWRITING RESULTS

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(DOLLARS IN MILLIONS)

 

		Total Insurance								Reinsurance Assumed								Worldwide Total
		2012				2011				2012				2011				2012				2011
Net Premiums Written		$	6,047			$	5,912			$	2			$	2			$	6,049			$	5,914
Decrease (Increase) in Unearned Premiums			(116	)			(148	)			1				1				(115	)			(147	)
Net Premiums Earned			5,931				5,764				3				3				5,934				5,767
Net Losses Paid			3,254				3,160				34				50				3,288				3,210
Increase (Decrease) in Outstanding Losses			330				464				(51	)			(62	)			279				402
Net Losses Incurred			3,584				3,624				(17	)			(12	)			3,567				3,612
Expenses Incurred			1,912				1,859				1				—				1,913				1,859
Dividends Incurred			16				16				—				—				16				16
Statutory Underwriting Income (Loss)		$	419			$	265			$	19			$	15				438				280
Increase in Deferred Acquisition Costs																			24				57
GAAP Underwriting Income																		$	462			$	337
Ratios After Dividends to Policyholders:
Loss			60.6	%			63.1	%			*	%			*	%			60.3	%			62.8	%
Expense			31.7				31.5				*				*				31.7				31.5
Combined			92.3	%			94.6	%			*	%			*	%			92.0	%			94.3	%
Premiums Written as a % of Total			100.0	%			100.0	%			0.0	%			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 9 of 17

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THE CHUBB CORPORATION — WORLDWIDE

PROPERTY AND CASUALTY UNDERWRITING RESULTS

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(DOLLARS IN MILLIONS)

 

		United States								Outside the United States								Worldwide Total
		2012				2011				2012				2011				2012				2011
Net Premiums Written		$	4,448			$	4,284			$	1,601			$	1,630			$	6,049			$	5,914
Decrease (Increase) in Unearned Premiums			(58	)			(41	)			(57	)			(106	)			(115	)			(147	)
Net Premiums Earned			4,390				4,243				1,544				1,524				5,934				5,767
Net Losses Paid			2,553				2,439				735				771				3,288				3,210
Increase (Decrease) in Outstanding Losses			147				250				132				152				279				402
Net Losses Incurred			2,700				2,689				867				923				3,567				3,612
Expenses Incurred			1,334				1,275				579				584				1,913				1,859
Dividends Incurred			16				16				—				—				16				16
Statutory Underwriting Income (Loss)		$	340			$	263			$	98			$	17				438				280
Increase in Deferred Acquisition Costs																			24				57
GAAP Underwriting Income																		$	462			$	337
Ratios After Dividends to Policyholders:
Loss			61.7	%			63.6	%			56.2	%			60.6	%			60.3	%			62.8	%
Expense			30.1				29.9				36.2				35.8				31.7				31.5
Combined			91.8	%			93.5	%			92.4	%			96.4	%			92.0	%			94.3	%
Premiums Written as a % of Total			73.5	%			72.4	%			26.5	%			27.6	%			100.0	%			100.0	%

Property and casualty underwriting results for 2011 reflect a reclassification of certain business that was previously considered outside the United States business and is now considered United States business. This reclassification had no impact on worldwide total amounts.

 

Page 10 of 17

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THE CHUBB CORPORATION — WORLDWIDE

PROPERTY AND CASUALTY UNDERWRITING RESULTS

FOR THE QUARTERS ENDED JUNE 30, 2012 AND 2011

(DOLLARS IN MILLIONS)

 

		Personal Automobile								Homeowners								Other Personal								Total Personal
		2012				2011				2012				2011				2012				2011				2012				2011
Net Premiums Written		$	185			$	181			$	706			$	681			$	218			$	201			$	1,109			$	1,063
Decrease (Increase) in Unearned Premiums			(18	)			(14	)			(79	)			(72	)			2				3				(95	)			(83	)
Net Premiums Earned			167				167				627				609				220				204				1,014				980
Net Losses Paid			102				97				290				353				102				125				494				575
Increase (Decrease) in Outstanding Losses			4				5				73				41				16				(1	)			93				45
Net Losses Incurred			106				102				363				394				118				124				587				620
Expenses Incurred			55				56				229				225				85				76				369				357
Dividends Incurred			—				—				—				—				—				—				—				—
Statutory Underwriting Income (Loss)		$	6			$	9			$	35			$	(10	)		$	17			$	4			$	58			$	3
Ratios After Dividends to Policyholders:
Loss			63.5	%			61.1	%			57.9	%			64.7	%			53.6	%			60.8	%			57.9	%			63.3	%
Expense			29.7				30.9				32.4				33.0				39.0				37.8				33.3				33.6
Combined			93.2	%			92.0	%			90.3	%			97.7	%			92.6	%			98.6	%			91.2	%			96.9	%
Premiums Written as a % of Total			6.0	%			5.9	%			22.8	%			22.3	%			7.0	%			6.6	%			35.8	%			34.8	%

 

Page 11 of 17

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THE CHUBB CORPORATION — WORLDWIDE

PROPERTY AND CASUALTY UNDERWRITING RESULTS

FOR THE QUARTERS ENDED JUNE 30, 2012 AND 2011

(DOLLARS IN MILLIONS)

 

		Commercial Multiple Peril								Commercial Casualty								Commercial Workers’ Compensation								Commercial Property and Marine								Total Commercial
		2012				2011				2012				2011				2012				2011				2012				2011				2012				2011
Net Premiums Written		$	292			$	295			$	420			$	419			$	249			$	220			$	392			$	376			$	1,353			$	1,310
Decrease (Increase) in Unearned Premiums			(7	)			(10	)			(3	)			(14	)			(8	)			(14	)			(30	)			(38	)			(48	)			(76	)
Net Premiums Earned			285				285				417				405				241				206				362				338				1,305				1,234
Net Losses Paid			149				156				195				274				126				109				214				176				684				715
Increase (Decrease) in Outstanding Losses			35				83				74				(47	)			46				34				39				95				194				165
Net Losses Incurred			184				239				269				227				172				143				253				271				878				880
Expenses Incurred			106				113				116				117				54				47				126				124				402				401
Dividends Incurred			—				—				—				—				7				7				—				—				7				7
Statutory Underwriting Income (Loss)		$	(5	)		$	(67	)		$	32			$	61			$	8			$	9			$	(17	)		$	(57	)		$	18			$	(54	)
Ratios After Dividends to Policyholders:
Loss			64.6	%			83.9	%			64.5	%			56.1	%			73.5	%			71.8	%			69.9	%			80.2	%			67.6	%			71.7	%
Expense			36.3				38.3				27.6				27.9				22.3				22.1				32.1				33.0				29.9				30.8
Combined			100.9	%			122.2	%			92.1	%			84.0	%			95.8	%			93.9	%			102.0	%			113.2	%			97.5	%			102.5	%
Premiums Written as a % of Total			9.4	%			9.7	%			13.6	%			13.7	%			8.0	%			7.2	%			12.6	%			12.3	%			43.6	%			42.9	%

 

Page 12 of 17

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THE CHUBB CORPORATION — WORLDWIDE

PROPERTY AND CASUALTY UNDERWRITING RESULTS

FOR THE QUARTERS ENDED JUNE 30, 2012 AND 2011

(DOLLARS IN MILLIONS)

 

		Professional Liability								Surety								Total Specialty
		2012				2011				2012				2011				2012				2011
Net Premiums Written		$	555			$	595			$	83			$	85			$	638			$	680
Decrease (Increase) in Unearned Premiums			29				21				(3	)			(4	)			26				17
Net Premiums Earned			584				616				80				81				664				697
Net Losses Paid			440				420				5				9				445				429
Increase (Decrease) in Outstanding Losses			(40	)			(73	)			(2	)			(1	)			(42	)			(74	)
Net Losses Incurred			400				347				3				8				403				355
Expenses Incurred			163				168				32				29				195				197
Dividends Incurred			—				—				1				1				1				1
Statutory Underwriting Income (Loss)		$	21			$	101			$	44			$	43			$	65			$	144
Ratios After Dividends to Policyholders:
Loss			68.5	%			56.4	%			3.8	%			10.0	%			60.8	%			51.0	%
Expense			29.4				28.2				39.0				34.5				30.6				29.0
Combined			97.9	%			84.6	%			42.8	%			44.5	%			91.4	%			80.0	%
Premiums Written as a % of Total			17.9	%			19.5	%			2.7	%			2.8	%			20.6	%			22.3	%

 

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THE CHUBB CORPORATION — WORLDWIDE

PROPERTY AND CASUALTY UNDERWRITING RESULTS

FOR THE QUARTERS ENDED JUNE 30, 2012 AND 2011

(DOLLARS IN MILLIONS)

 

		Total Insurance								Reinsurance Assumed								Worldwide Total
		2012				2011				2012				2011				2012				2011
Net Premiums Written		$	3,100			$	3,053			$	—			$	2			$	3,100			$	3,055
Decrease (Increase) in Unearned Premiums			(117	)			(142	)			—				—				(117	)			(142	)
Net Premiums Earned			2,983				2,911				—				2				2,983				2,913
Net Losses Paid			1,623				1,719				14				24				1,637				1,743
Increase (Decrease) in Outstanding Losses			245				136				(22	)			(32	)			223				104
Net Losses Incurred			1,868				1,855				(8	)			(8	)			1,860				1,847
Expenses Incurred			966				955				—				—				966				955
Dividends Incurred			8				8				—				—				8				8
Statutory Underwriting Income (Loss)		$	141			$	93			$	8			$	10				149				103
Increase in Deferred Acquisition Costs																			10				32
GAAP Underwriting Income																		$	159			$	135
Ratios After Dividends to Policyholders:
Loss			62.8	%			63.9	%			*	%			*	%			62.5	%			63.6	%
Expense			31.2				31.4				*				*				31.3				31.3
Combined			94.0	%			95.3	%			*	%			*	%			93.8	%			94.9	%
Premiums Written as a % of Total			100.0	%			100.0	%			0.0	%			0.0	%			100.0	%			100.0	%

 

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

 

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THE CHUBB CORPORATION — WORLDWIDE

PROPERTY AND CASUALTY UNDERWRITING RESULTS

FOR THE QUARTERS ENDED JUNE 30, 2012 AND 2011

(DOLLARS IN MILLIONS)

 

		United States								Outside the United States								Worldwide Total
		2012				2011				2012				2011				2012				2011
Net Premiums Written		$	2,366			$	2,298			$	734			$	757			$	3,100			$	3,055
Decrease (Increase) in Unearned Premiums			(161	)			(167	)			44				25				(117	)			(142	)
Net Premiums Earned			2,205				2,131				778				782				2,983				2,913
Net Losses Paid			1,291				1,287				346				456				1,637				1,743
Increase (Decrease) in Outstanding Losses			152				152				71				(48	)			223				104
Net Losses Incurred			1,443				1,439				417				408				1,860				1,847
Expenses Incurred			688				671				278				284				966				955
Dividends Incurred			8				8				—				—				8				8
Statutory Underwriting Income (Loss)		$	66			$	13			$	83			$	90				149				103
Increase in Deferred Acquisition Costs																			10				32
GAAP Underwriting Income																		$	159			$	135
Ratios After Dividends to Policyholders:
Loss			65.7	%			67.8	%			53.6	%			52.2	%			62.5	%			63.6	%
Expense			29.2				29.3				37.9				37.5				31.3				31.3
Combined			94.9	%			97.1	%			91.5	%			89.7	%			93.8	%			94.9	%
Premiums Written as a % of Total			76.3	%			75.2	%			23.7	%			24.8	%			100.0	%			100.0	%

Property and casualty underwriting results for 2011 reflect a reclassification of certain business that was previously considered outside the United States business and is now considered United States business. This reclassification had no impact on worldwide total amounts.

 

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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, certain 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 results 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.

 

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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
		2012				2011				2012				2011
		(dollars in millions)
		(As Adjusted)												(As Adjusted)
Annualized Net Income		$	1,616			$	1,676			$	1,820			$	1,856
Average Shareholders’ Equity		$	15,526			$	15,412			$	15,451			$	15,360
Return on Equity			10.4	%			10.9	%			11.8	%			12.1	%
Annualized Operating Income		$	1,496			$	1,496			$	1,686			$	1,558
Average Shareholders’ Equity Excluding Unrealized Appreciation or Depreciation		$	13,701			$	14,204			$	13,655			$	14,181
Operating Return on Equity			10.9	%			10.5	%			12.3	%			11.0	%

 

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