Exhibit 99.1
| The Chubb Corporation | Supplementary Investor Information | September 30, 2003 | ||
| 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, 2003
| Page | |||||
The Chubb Corporation: | |||||
Sources of Consolidated Net Income | 1 | ||||
Share Data | 2 | ||||
Consolidated Balance Sheet Highlights | 3 | ||||
Summary of Invested Assets: | |||||
Corporate | 4 | ||||
Property and Casualty | 4 | ||||
Property and Casualty Insurance Group: | |||||
Investment Income After Taxes | 5 | ||||
Statutory Policyholders’ Surplus | 5 | ||||
Combined Loss and Expense Ratios | 6 | ||||
Claims and Claim Expense Components | 6 | ||||
Change in Net Unpaid Claims | 7 | ||||
Underwriting Results — Year-to-Date | 8-11 | ||||
Underwriting Results — Quarterly | 12-15 | ||||
Definitions of Key Terms | 16 | ||||
THE CHUBB CORPORATION
SOURCES OF CONSOLIDATED NET INCOME
| PERIODS ENDED SEPTEMBER 30 | |||||||||||||||||
| THIRD QUARTER | NINE MONTHS | ||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||
| (in millions) | |||||||||||||||||
| Property and Casualty | |||||||||||||||||
| Net Premiums Written | $ | 2,845.5 | $ | 2,315.2 | $ | 8,137.5 | $ | 6,620.2 | |||||||||
| Underwriting Income (Loss)(a) | 70.6 | (646.2 | ) | 242.0 | (564.8 | ) | |||||||||||
| Investment Income, Net of Expenses | 269.6 | 233.3 | 776.7 | 691.3 | |||||||||||||
| Other Charges | (.9 | ) | (3.5 | ) | (22.6 | ) | (16.8 | ) | |||||||||
Property and Casualty Income (Loss) | 339.3 | (416.4 | ) | 996.1 | 109.7 | ||||||||||||
| Chubb Financial Solutions Non-Insurance Business | (38.8 | ) | (40.4 | ) | (30.6 | ) | (55.9 | ) | |||||||||
| Corporate and Other | (23.3 | ) | (19.7 | ) | (102.4 | ) | (55.4 | ) | |||||||||
| Consolidated Operating Income (Loss) Before Income Tax | 277.2 | (476.5 | ) | 863.1 | (1.6 | ) | |||||||||||
| Federal and Foreign Income Tax (Credit) | 56.7 | (205.8 | ) | 182.3 | (118.8 | ) | |||||||||||
CONSOLIDATED OPERATING INCOME (LOSS) | 220.5 | (270.7 | ) | 680.8 | 117.2 | ||||||||||||
| Realized Investment Gains After Income Tax | 39.3 | 28.6 | 55.7 | 49.1 | |||||||||||||
CONSOLIDATED NET INCOME (LOSS) | $ | 259.8 | $ | (242.1 | ) | $ | 736.5 | $ | 166.3 | ||||||||
| PROPERTY AND CASUALTY INVESTMENT INCOME AFTER INCOME TAX | $ | 213.9 | $ | 190.1 | $ | 619.1 | $ | 566.5 | |||||||||
Effective January 1, 2003, the Corporation adopted the fair value method of accounting for stock-based employee compensation plans using the modified prospective method of transition. The change in accounting resulted in a decrease in operating income before income tax of $15.4 million ($10.4 million after-tax) for the third quarter of 2003 and $51.1 million ($35.7 million after-tax) for the nine months ended September 30, 2003.
| (a) | The underwriting loss for the first nine months and third quarter of 2002 includes net losses of $625.0 million ($406.3 million after-tax) recognized in the third quarter related to asbestos and toxic waste claims. |
Page 1 of 16
THE CHUBB CORPORATION
SHARE DATA
| PERIODS ENDED SEPTEMBER 30 | |||||||||||||||||
| THIRD QUARTER | NINE MONTHS | ||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||
Diluted Earnings Per Share Data | |||||||||||||||||
| Operating Income (Loss) | $ | 1.16 | $ | (1.59 | ) | $ | 3.82 | $ | .68 | ||||||||
| Realized Investment Gains | .21 | .17 | .31 | .28 | |||||||||||||
| Net Income (Loss) | $ | 1.37 | $ | (1.42 | ) | $ | 4.13 | $ | .96 | ||||||||
| Effect of Catastrophe Losses | $ | (.33 | ) | $ | (.20 | ) | $ | (.95 | ) | $ | (.28 | ) | |||||
| Effect of Asbestos and Toxic Waste Losses | $ | — | $ | (2.38 | ) | $ | — | $ | (2.50 | ) | |||||||
| Effect of Chubb Financial Solutions Non-Insurance Business | $ | (.14 | ) | $ | (.15 | ) | $ | (.11 | ) | $ | (.21 | ) | |||||
| Effect of Expensing Stock Options | $ | (.05 | ) | $ | — | $ | (.20 | ) | $ | — | |||||||
Average Common and Potentially Dilutive Shares Outstanding(in millions) | 189.4 | 170.6 | 178.4 | 173.3 | |||||||||||||
SHARE REPURCHASE ACTIVITY
| PERIODS ENDED SEPTEMBER 30 | ||||||||||||
| FROM | ||||||||||||
| THIRD | NINE | FEBRUARY 1994 | ||||||||||
| QUARTER | MONTHS | TO | ||||||||||
| 2003 | 2003 | SEPTEMBER 30, 2003 | ||||||||||
| (dollars in millions, except per share amounts) | ||||||||||||
| Cost of Shares Repurchased | — | — | $ | 2,633.4 | ||||||||
| Average Cost Per Share | — | — | $ | 64.71 | ||||||||
| Shares Repurchased | — | — | 40,698,200 | |||||||||
In February 1994, the Board of Directors authorized the repurchase of up to 10,000,000 shares of common stock. Through March 1997, 6,851,600 shares were repurchased under the 1994 share repurchase authorization. In March 1997, the Board of Directors replaced the 1994 authorization with a new authorization to repurchase up to 17,500,000 shares of common stock. In July 1998, the Board of Directors authorized the repurchase of up to an additional 12,500,000 shares. In June 2001, the Board of Directors authorized the repurchase of up to an additional 16,000,000 shares; the 2001 authorization expired on June 30, 2003. As of September 30, 2003, 3,287,100 shares remained under the 1998 share repurchase authorization.
Page 2 of 16
THE CHUBB CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
| Sept. 30 | Dec. 31 | |||||||||
| 2003 | 2002 | |||||||||
| (in millions) | ||||||||||
Invested Assets(at carrying value) | ||||||||||
| Short Term Investments | $ | 2,689.4 | $ | 1,756.7 | ||||||
| Fixed Maturities | ||||||||||
| Tax Exempt | 11,140.7 | 9,877.8 | ||||||||
| Taxable | 10,393.3 | 8,385.7 | ||||||||
| Equity Securities | 1,482.7 | 992.2 | ||||||||
Total Invested Assets | $ | 25,706.1 | $ | 21,012.4 | ||||||
| Unrealized Appreciation of Fixed Maturities Carried at Amortized Cost | $ | 40.7 | $ | 55.8 | ||||||
Capitalization | ||||||||||
| Long Term Debt | $ | 2,814.1 | $ | 1,959.1 | ||||||
| Shareholders’ Equity | 8,477.6 | 6,859.2 | ||||||||
Total Capitalization | $ | 11,291.7 | $ | 8,818.3 | ||||||
DEBT AS A PERCENTAGE OF TOTAL CAPITALIZATION | 24.9 | % | 22.2 | % | ||||||
Actual Common Shares Outstanding | 187.7 | 171.2 | ||||||||
Book Value Per Common Share | $ | 45.17 | $ | 40.06 | ||||||
Book Value Per Share,with Available-for-Sale Fixed Maturities at Amortized Cost | $ | 41.82 | $ | 36.61 | ||||||
Page 3 of 16
THE CHUBB CORPORATION
SUMMARY OF INVESTED ASSETS
CORPORATE
| Cost or | Market | Carrying | |||||||||||||||||||||||
| Amortized Cost | Value | Value | |||||||||||||||||||||||
| Sept. 30 | Dec. 31 | Sept. 30 | Dec. 31 | Sept. 30 | Dec. 31 | ||||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||
| Short Term Investments | $ | 894.5 | $ | 106.4 | $ | 894.5 | $ | 106.4 | $ | 894.5 | $ | 106.4 | |||||||||||||
| Taxable Fixed Maturities | 396.2 | 144.7 | 400.6 | 150.3 | 400.6 | 150.3 | |||||||||||||||||||
| Equity Securities | 8.5 | 71.0 | 8.4 | 71.3 | 8.4 | 71.3 | |||||||||||||||||||
| TOTAL | $ | 1,299.2 | $ | 322.1 | $ | 1,303.5 | $ | 328.0 | $ | 1,303.5 | $ | 328.0 | |||||||||||||
PROPERTY AND CASUALTY
| Cost or | Market | Carrying | ||||||||||||||||||||||||
| Amortized Cost | Value | Value | ||||||||||||||||||||||||
| Sept. 30 | Dec. 31 | Sept. 30 | Dec. 31 | Sept. 30 | Dec. 31 | |||||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | |||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Short Term Investments | $ | 1,794.9 | $ | 1,650.3 | $ | 1,794.9 | $ | 1,650.3 | $ | 1,794.9 | $ | 1,650.3 | ||||||||||||||
| Fixed Maturities | ||||||||||||||||||||||||||
| Tax Exempt | 10,507.1 | 9,244.1 | 11,181.4 | 9,933.6 | 11,140.7 | 9,877.8 | ||||||||||||||||||||
| Taxable | 9,665.8 | 7,967.8 | 9,992.7 | 8,235.4 | 9,992.7 | 8,235.4 | ||||||||||||||||||||
| Common Stocks | 1,358.4 | 886.0 | 1,426.4 | 874.7 | 1,426.4 | 874.7 | ||||||||||||||||||||
| Preferred Stocks | 40.7 | 41.3 | 47.9 | 46.2 | 47.9 | 46.2 | ||||||||||||||||||||
| TOTAL | $ | 23,366.9 | $ | 19,789.5 | $ | 24,443.3 | $ | 20,740.2 | $ | 24,402.6 | $ | 20,684.4 | ||||||||||||||
Page 4 of 16
THE CHUBB CORPORATION
PROPERTY AND CASUALTY
INVESTMENT INCOME AFTER TAXES
| PERIODS ENDED SEPTEMBER 30 | |||||||||||||||||
| THIRD QUARTER | NINE MONTHS | ||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||
| (in millions) | |||||||||||||||||
Investment Income | |||||||||||||||||
| Dividends | $ | 9.0 | $ | 3.0 | $ | 19.9 | $ | 7.5 | |||||||||
| Taxable Interest | 86.2 | 76.7 | 253.1 | 220.8 | |||||||||||||
| Tax Exempt Interest | 121.5 | 115.6 | 357.4 | 349.8 | |||||||||||||
| Investment Expenses | (2.8 | ) | (5.2 | ) | (11.3 | ) | (11.6 | ) | |||||||||
| TOTAL | $ | 213.9 | $ | 190.1 | $ | 619.1 | $ | 566.5 | |||||||||
| Amounts are shown net of applicable income taxes. | |||||||||||||||||
Effective Tax Rate | 20.7 | % | 18.5 | % | 20.3 | % | 18.1 | % | |||||||||
After Tax Annualized Yield | 3.71 | % | 4.31 | % | 3.83 | % | 4.41 | % | |||||||||
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 market value.
STATUTORY POLICYHOLDERS’ SURPLUS
| Sept. 30 | Dec. 31 | |||||||
| 2003 | 2002 | |||||||
| (in millions) | ||||||||
| Estimated Statutory Policyholders’ Surplus | $ | 6,200 | $ | 4,512 | ||||
| Rolling Year Statutory Net Premiums Written | 10,538 | 9,034 | ||||||
| Ratio of Statutory Net Premiums Written to Estimated Policyholders’ Surplus | 1.70:1 | 2.00:1 | ||||||
Statutory Policyholders’ Surplus and Net Premiums Written include all domestic and foreign property and casualty subsidiaries.
Page 5 of 16
THE CHUBB CORPORATION
PROPERTY AND CASUALTY
UNDERWRITING RATIOS
| PERIODS ENDED SEPTEMBER 30 | ||||||||||||||||
| THIRD QUARTER | NINE MONTHS | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
| Loss Ratio | 65.7 | % | 98.8 | % | 65.1 | % | 77.2 | % | ||||||||
| Expense Ratio | 30.9 | 31.2 | 30.7 | 31.5 | ||||||||||||
| Combined Ratio | 96.6 | % | 130.0 | % | 95.8 | % | 108.7 | % | ||||||||
| Effect of Catastrophe Losses on Combined Ratio | 3.7 | % | 2.5 | % | 3.5 | % | 1.3 | % | ||||||||
The 2002 underwriting ratios include the effect of losses of $625.0 million related to asbestos and toxic waste claims recognized in the third quarter. Excluding the effect of such losses, the losses to premiums earned ratio was 68.7% for the third quarter of 2002 and 66.5% for the nine months ended September 30, 2002 and the combined loss and expense ratio was 99.9% and 98.0%, respectively.
CLAIMS AND CLAIM EXPENSE COMPONENTS
| PERIODS ENDED SEPTEMBER 30 | ||||||||||||||||
| THIRD QUARTER | NINE MONTHS | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
| (in millions) | ||||||||||||||||
| Paid Claims and Claim Expenses | $ | 1,337.4 | $ | 1,019.6 | $ | 3,708.9 | $ | 3,278.9 | ||||||||
| Increase in Unpaid Claims and Claim Expenses | 373.9 | 1,032.4 | 1,141.1 | 1,234.1 | ||||||||||||
| Total Claims and Claim Expenses | $ | 1,711.3 | $ | 2,052.0 | $ | 4,850.0 | $ | 4,513.0 | ||||||||
The increase in unpaid claims and claim expenses for the third quarter and the first nine months of 2002 includes $611.7 million and $617.5 million, respectively, related to asbestos and toxic waste claims.
Page 6 of 16
THE CHUBB CORPORATION
PROPERTY AND CASUALTY
CHANGE IN NET UNPAID CLAIMS
NINE MONTHS ENDED SEPTEMBER 30, 2003
| All Other | ||||||||||||||||||||||
| Net Unpaid Claims | IBNR | Unpaid Claims | ||||||||||||||||||||
| Increase | Increase | |||||||||||||||||||||
| 9/30/2003 | 12/31/02 | Increase | (Decrease) | (Decrease) | ||||||||||||||||||
| (in millions) | ||||||||||||||||||||||
PERSONAL INSURANCE | ||||||||||||||||||||||
| Automobile | $ | 333.3 | $ | 306.7 | $ | 26.6 | $ | 8.8 | $ | 17.8 | ||||||||||||
| Homeowners | 569.7 | 488.3 | 81.4 | 70.4 | 11.0 | |||||||||||||||||
| Other | 294.5 | 271.3 | 23.2 | 5.2 | 18.0 | |||||||||||||||||
Total Personal | 1,197.5 | 1,066.3 | 131.2 | 84.4 | 46.8 | |||||||||||||||||
COMMERCIAL INSURANCE | ||||||||||||||||||||||
| Multiple Peril | 1,229.8 | 1,224.4 | 5.4 | 41.1 | (35.7 | ) | ||||||||||||||||
| Casualty | 3,649.4 | 3,526.0 | 123.4 | (29.0 | ) | 152.4 | ||||||||||||||||
| Workers’ Compensation | 835.4 | 746.6 | 88.8 | 52.3 | 36.5 | |||||||||||||||||
| Property and Marine | 440.1 | 371.2 | 68.9 | 64.7 | 4.2 | |||||||||||||||||
Total Commercial | 6,154.7 | 5,868.2 | 286.5 | 129.1 | 157.4 | |||||||||||||||||
SPECIALTY INSURANCE | ||||||||||||||||||||||
| Executive Protection | 3,811.0 | 3,335.3 | 475.7 | 246.5 | 229.2 | |||||||||||||||||
| Financial Institutions | 1,664.3 | 1,580.5 | 83.8 | 220.6 | (136.8 | ) | ||||||||||||||||
| Other | 955.2 | 791.3 | 163.9 | 214.1 | (50.2 | ) | ||||||||||||||||
Total Specialty | 6,430.5 | 5,707.1 | 723.4 | 681.2 | 42.2 | |||||||||||||||||
TOTAL | $ | 13,782.7 | $ | 12,641.6 | $ | 1,141.1 | $ | 894.7 | $ | 246.4 | ||||||||||||
Page 7 of 16
THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(MILLIONS OF DOLLARS)
| Personal | Other | Total | |||||||||||||||||||||||||||||||
| Automobile | Homeowners | Personal | Personal | ||||||||||||||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | ||||||||||||||||||||||||||
Net Premiums Written | $ | 443.6 | $ | 402.1 | $ | 1,114.2 | $ | 971.1 | $ | 391.4 | $ | 364.1 | $ | 1,949.2 | $ | 1,737.3 | |||||||||||||||||
Increase (Decrease) in Unearned Premiums | 28.4 | 26.0 | 93.6 | 115.9 | 23.2 | 28.5 | 145.2 | 170.4 | |||||||||||||||||||||||||
Net Premiums Earned | 415.2 | 376.1 | 1,020.6 | 855.2 | 368.2 | 335.6 | 1,804.0 | 1,566.9 | |||||||||||||||||||||||||
Net Losses Paid | 261.7 | 229.8 | 653.5 | 525.8 | 145.5 | 139.8 | 1,060.7 | 895.4 | |||||||||||||||||||||||||
Increase (Decrease) in Outstanding Losses | 26.6 | 27.3 | 81.4 | 72.0 | 23.2 | 10.2 | 131.2 | 109.5 | |||||||||||||||||||||||||
Net Losses Incurred | 288.3 | 257.1 | 734.9 | 597.8 | 168.7 | 150.0 | 1,191.9 | 1,004.9 | |||||||||||||||||||||||||
Expenses Incurred | 130.5 | 121.0 | 385.2 | 347.2 | 125.0 | 119.4 | 640.7 | 587.6 | |||||||||||||||||||||||||
Dividends Incurred | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||||||||||||||||
Underwriting Income (Loss) | $ | (3.6 | ) | $ | (2.0 | ) | $ | (99.5 | ) | $ | (89.8 | ) | $ | 74.5 | $ | 66.2 | $ | (28.6 | ) | $ | (25.6 | ) | |||||||||||
Ratios After Dividends to Policyholders: | |||||||||||||||||||||||||||||||||
Loss | 69.5 | % | 68.4 | % | 72.0 | % | 69.9 | % | 45.8 | % | 44.7 | % | 66.1 | % | 64.2 | % | |||||||||||||||||
Expense | 29.4 | 30.1 | 34.6 | 35.8 | 32.0 | 32.8 | 32.8 | 33.8 | |||||||||||||||||||||||||
Combined | 98.9 | % | 98.5 | % | 106.6 | % | 105.7 | % | 77.8 | % | 77.5 | % | 98.9 | % | 98.0 | % | |||||||||||||||||
Premiums Written as a % of Total | 5.5 | % | 6.1 | % | 13.7 | % | 14.7 | % | 4.8 | % | 5.5 | % | 24.0 | % | 26.3 | % | |||||||||||||||||
Page 8 of 16
THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(MILLIONS OF DOLLARS)
| Commercial | Commercial | Workers' | Property | Total | ||||||||||||||||||||||||||||||||||||
| Multiple Peril | Casualty | Compensation | and Marine | Commercial | ||||||||||||||||||||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | |||||||||||||||||||||||||||||||
Net Premiums Written | $ | 809.4 | $ | 687.5 | $ | 1,010.0 | $ | 834.7 | $ | 475.9 | $ | 350.3 | $ | 766.1 | $ | 652.7 | $ | 3,061.4 | $ | 2,525.2 | ||||||||||||||||||||
Increase (Decrease) in Unearned Premiums | 53.3 | 69.6 | 109.1 | 134.8 | 74.1 | 48.5 | 38.7 | 155.7 | 275.2 | 408.6 | ||||||||||||||||||||||||||||||
Net Premiums Earned | 756.1 | 617.9 | 900.9 | 699.9 | 401.8 | 301.8 | 727.4 | 497.0 | 2,786.2 | 2,116.6 | ||||||||||||||||||||||||||||||
Net Losses Paid | 401.6 | 426.0 | 414.8 | 488.3 | 178.1 | 150.5 | 331.6 | 265.3 | 1,326.1 | 1,330.1 | ||||||||||||||||||||||||||||||
Increase (Decrease) in Outstanding Losses | 5.4 | (36.4 | ) | 123.4 | 601.9 | 88.8 | 37.4 | 68.9 | (1.7 | ) | 286.5 | 601.2 | ||||||||||||||||||||||||||||
Net Losses Incurred | 407.0 | 389.6 | 538.2 | 1,090.2 | 266.9 | 187.9 | 400.5 | 263.6 | 1,612.6 | 1,931.3 | ||||||||||||||||||||||||||||||
Expenses Incurred | 295.5 | 264.2 | 292.3 | 251.0 | 112.4 | 88.4 | 262.2 | 216.7 | 962.4 | 820.3 | ||||||||||||||||||||||||||||||
Dividends Incurred | 0.0 | 0.0 | 0.0 | 0.0 | 9.7 | 17.3 | 0.0 | 0.0 | 9.7 | 17.3 | ||||||||||||||||||||||||||||||
Underwriting Income (Loss) | $ | 53.6 | $ | (35.9 | ) | $ | 70.4 | $ | (641.3 | ) | $ | 12.8 | $ | 8.2 | $ | 64.7 | $ | 16.7 | $ | 201.5 | $ | (652.3 | ) | |||||||||||||||||
Ratios After Dividends to Policyholders: | ||||||||||||||||||||||||||||||||||||||||
Loss | 53.8 | % | 63.1 | % | 59.8 | % | 155.8 | % | 68.1 | % | 66.1 | % | 55.1 | % | 53.0 | % | 58.1 | % | 92.0 | % | ||||||||||||||||||||
Expense | 36.5 | 38.4 | 28.9 | 30.0 | 24.1 | 26.5 | 34.2 | 33.2 | 31.5 | 32.7 | ||||||||||||||||||||||||||||||
Combined | 90.3 | % | 101.5 | % | 88.7 | % | 185.8 | % | 92.2 | % | 92.6 | % | 89.3 | % | 86.2 | % | 89.6 | % | 124.7 | % | ||||||||||||||||||||
Premiums Written as a % of Total | 9.9 | % | 10.4 | % | 12.4 | % | 12.6 | % | 5.9 | % | 5.3 | % | 9.4 | % | 9.8 | % | 37.6 | % | 38.1 | % | ||||||||||||||||||||
The Property and Casualty underwriting results for 2002 include the effect of losses of $625.0 million related to asbestos and toxic waste claims recognized in the third quarter. For the nine months ended September 30, 2002, excluding the effect of such losses, the combined loss and expense ratio was 96.5% for Casualty and 94.9% for Total Commercial.
Page 9 of 16
THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(MILLIONS OF DOLLARS)
| Executive | Financial | Other | Total | Worldwide | ||||||||||||||||||||||||||||||||||||
| Protection | Institutions | Specialty | Specialty | Total | ||||||||||||||||||||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | |||||||||||||||||||||||||||||||
Net Premiums Written | $ | 1,526.0 | $ | 1,214.3 | $ | 603.4 | $ | 508.3 | $ | 997.5 | $ | 635.1 | $ | 3,126.9 | $ | 2,357.7 | $ | 8,137.5 | $ | 6,620.2 | ||||||||||||||||||||
Increase (Decrease) in Unearned Premiums | 89.4 | 52.2 | 25.5 | 38.3 | 135.6 | 81.9 | 250.5 | 172.4 | 670.9 | 751.4 | ||||||||||||||||||||||||||||||
Net Premiums Earned | 1,436.6 | 1,162.1 | 577.9 | 470.0 | 861.9 | 553.2 | 2,876.4 | 2,185.3 | 7,466.6 | 5,868.8 | ||||||||||||||||||||||||||||||
Net Losses Paid | 658.8 | 625.7 | 397.6 | 228.3 | 265.7 | 199.4 | 1,322.1 | 1,053.4 | 3,708.9 | 3,278.9 | ||||||||||||||||||||||||||||||
Increase (Decrease) in Outstanding Losses | 475.7 | 291.0 | 83.8 | 120.3 | 163.9 | 112.1 | 723.4 | 523.4 | 1,141.1 | 1,234.1 | ||||||||||||||||||||||||||||||
Net Losses Incurred | 1,134.5 | 916.7 | 481.4 | 348.6 | 429.6 | 311.5 | 2,045.5 | 1,576.8 | 4,850.0 | 4,513.0 | ||||||||||||||||||||||||||||||
Expenses Incurred | 381.3 | 326.5 | 163.7 | 139.5 | 342.2 | 201.4 | 887.2 | 667.4 | 2,490.3 | 2,075.3 | ||||||||||||||||||||||||||||||
Dividends Incurred | 0.0 | 0.0 | 5.6 | 8.0 | 2.7 | 1.3 | 8.3 | 9.3 | 18.0 | 26.6 | ||||||||||||||||||||||||||||||
Underwriting Income (Loss) | $ | (79.2 | ) | $ | (81.1 | ) | $ | (72.8 | ) | $ | (26.1 | ) | $ | 87.4 | $ | 39.0 | $ | (64.6 | ) | $ | (68.2 | ) | 108.3 | (746.1 | ) | |||||||||||||||
Increase in Deferred Acquisition Costs | 133.7 | 181.3 | ||||||||||||||||||||||||||||||||||||||
Adjusted Underwriting Income (Loss) | $ | 242.0 | $ | (564.8 | ) | |||||||||||||||||||||||||||||||||||
Ratios After Dividends to Policyholders: | ||||||||||||||||||||||||||||||||||||||||
Loss | 79.0 | % | 78.9 | % | 84.1 | % | 75.4 | % | 50.0 | % | 56.4 | % | 71.3 | % | 72.5 | % | 65.1 | % | 77.2 | % | ||||||||||||||||||||
Expense | 25.0 | 26.9 | 27.4 | 27.9 | 34.4 | 31.8 | 28.5 | 28.4 | 30.7 | 31.5 | ||||||||||||||||||||||||||||||
Combined | 104.0 | % | 105.8 | % | 111.5 | % | 103.3 | % | 84.4 | % | 88.2 | % | 99.8 | % | 100.9 | % | 95.8 | % | 108.7 | % | ||||||||||||||||||||
Premiums Written as a % of Total | 18.7 | % | 18.3 | % | 7.4 | % | 7.7 | % | 12.3 | % | 9.6 | % | 38.4 | % | 35.6 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||
The Property and Casualty underwriting results for 2002 include the effect of losses of $625.0 million related to asbestos and toxic waste claims recognized in the third quarter. For the nine months ended September 30, 2002, excluding the effect of such losses, the combined loss and expense ratio was 98.0% for Worldwide Total.
Page 10 of 16
THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(MILLIONS OF DOLLARS)
| Worldwide | ||||||||||||||||||||||||
| United States | Foreign | Total | ||||||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | |||||||||||||||||||
Net Premiums Written | $ | 6,735.2 | $ | 5,504.7 | $ | 1,402.3 | $ | 1,115.5 | $ | 8,137.5 | $ | 6,620.2 | ||||||||||||
Increase (Decrease) in Unearned Premiums | 603.6 | 675.7 | 67.3 | 75.7 | 670.9 | 751.4 | ||||||||||||||||||
Net Premiums Earned | 6,131.6 | 4,829.0 | 1,335.0 | 1,039.8 | 7,466.6 | 5,868.8 | ||||||||||||||||||
Net Losses Paid | 3,350.1 | 2,875.6 | 358.8 | 403.3 | 3,708.9 | 3,278.9 | ||||||||||||||||||
Increase (Decrease) in Outstanding Losses | 748.6 | 955.7 | 392.5 | 278.4 | 1,141.1 | 1,234.1 | ||||||||||||||||||
Net Losses Incurred | 4,098.7 | 3,831.3 | 751.3 | 681.7 | 4,850.0 | 4,513.0 | ||||||||||||||||||
Expenses Incurred | 1,995.0 | 1,649.0 | 495.3 | 426.3 | 2,490.3 | 2,075.3 | ||||||||||||||||||
Dividends Incurred | 18.0 | 26.6 | 0.0 | 0.0 | 18.0 | 26.6 | ||||||||||||||||||
Underwriting Income (Loss) | $ | 19.9 | $ | (677.9 | ) | $ | 88.4 | $ | (68.2 | ) | 108.3 | (746.1 | ) | |||||||||||
Increase in Deferred Acquisition Costs | 133.7 | 181.3 | ||||||||||||||||||||||
Adjusted Underwriting Income (Loss) | $ | 242.0 | $ | (564.8 | ) | |||||||||||||||||||
Ratios After Dividends to Policyholders: | ||||||||||||||||||||||||
Loss | 67.0 | % | 79.8 | % | 56.3 | % | 65.6 | % | 65.1 | % | 77.2 | % | ||||||||||||
Expense | 29.7 | 30.1 | 35.3 | 38.2 | 30.7 | 31.5 | ||||||||||||||||||
Combined | 96.7 | % | 109.9 | % | 91.6 | % | 103.8 | % | 95.8 | % | 108.7 | % | ||||||||||||
Premiums Written as a % of Total | 82.8 | % | 83.2 | % | 17.2 | % | 16.8 | % | 100.0 | % | 100.0 | % | ||||||||||||
The Property and Casualty underwriting results for 2002 include the effect of losses of $625.0 million related to asbestos and toxic waste claims recognized in the third quarter. For the nine months ended September 30, 2002, excluding the effect of such losses, the combined loss and expense ratio was 96.9% for United States Total and 98.0% for Worldwide Total.
Page 11 of 16
THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTER ENDED SEPTEMBER 30, 2003 AND 2002
(MILLIONS OF DOLLARS)
| Personal | Other | Total | |||||||||||||||||||||||||||||||
| Automobile | Homeowners | Personal | Personal | ||||||||||||||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | ||||||||||||||||||||||||||
Net Premiums Written | $ | 154.3 | $ | 144.0 | $ | 402.9 | $ | 353.4 | $ | 132.1 | $ | 123.3 | $ | 689.3 | $ | 620.7 | |||||||||||||||||
Increase (Decrease) in Unearned Premiums | 10.7 | 12.2 | 50.8 | 53.5 | 7.7 | 8.9 | 69.2 | 74.6 | |||||||||||||||||||||||||
Net Premiums Earned | 143.6 | 131.8 | 352.1 | 299.9 | 124.4 | 114.4 | 620.1 | 546.1 | |||||||||||||||||||||||||
Net Losses Paid | 88.7 | 76.7 | 219.1 | 185.5 | 56.3 | 53.8 | 364.1 | 316.0 | |||||||||||||||||||||||||
Increase (Decrease) in Outstanding Losses | 8.9 | 9.9 | 49.2 | 35.2 | 0.4 | (2.4 | ) | 58.5 | 42.7 | ||||||||||||||||||||||||
Net Losses Incurred | 97.6 | 86.6 | 268.3 | 220.7 | 56.7 | 51.4 | 422.6 | 358.7 | |||||||||||||||||||||||||
Expenses Incurred | 43.8 | 41.5 | 131.1 | 124.4 | 43.8 | 41.1 | 218.7 | 207.0 | |||||||||||||||||||||||||
Dividends Incurred | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||||||||||||||||
Underwriting Income (Loss) | $ | 2.2 | $ | 3.7 | $ | (47.3 | ) | $ | (45.2 | ) | $ | 23.9 | $ | 21.9 | $ | (21.2 | ) | $ | (19.6 | ) | |||||||||||||
Ratios After Dividends to Policyholders: | |||||||||||||||||||||||||||||||||
Loss | 68.0 | % | 65.7 | % | 76.2 | % | 73.6 | % | 45.6 | % | 44.9 | % | 68.2 | % | 65.7 | % | |||||||||||||||||
Expense | 28.4 | 28.8 | 32.5 | 35.2 | 33.1 | 33.4 | 31.7 | 33.3 | |||||||||||||||||||||||||
Combined | 96.4 | % | 94.5 | % | 108.7 | % | 108.8 | % | 78.7 | % | 78.3 | % | 99.9 | % | 99.0 | % | |||||||||||||||||
Premiums Written as a % of Total | 5.4 | % | 6.2 | % | 14.2 | % | 15.3 | % | 4.6 | % | 5.3 | % | 24.2 | % | 26.8 | % | |||||||||||||||||
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THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTER ENDED SEPTEMBER 30, 2003 AND 2002
(MILLIONS OF DOLLARS)
| Commercial | Commercial | Workers' | Property | Total | ||||||||||||||||||||||||||||||||||||
| Multiple Peril | Casualty | Compensation | and Marine | Commercial | ||||||||||||||||||||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | |||||||||||||||||||||||||||||||
Net Premiums Written | $ | 276.6 | $ | 235.1 | $ | 331.4 | $ | 275.9 | $ | 158.4 | $ | 116.4 | $ | 253.6 | $ | 238.4 | $ | 1,020.0 | $ | 865.8 | ||||||||||||||||||||
Increase (Decrease) in Unearned Premiums | 4.4 | 17.0 | 10.1 | 20.4 | 13.0 | 3.6 | 7.1 | 48.5 | 34.6 | 89.5 | ||||||||||||||||||||||||||||||
Net Premiums Earned | 272.2 | 218.1 | 321.3 | 255.5 | 145.4 | 112.8 | 246.5 | 189.9 | 985.4 | 776.3 | ||||||||||||||||||||||||||||||
Net Losses Paid | 152.8 | 136.4 | 142.7 | 126.5 | 58.5 | 48.3 | 117.0 | 74.4 | 471.0 | 385.6 | ||||||||||||||||||||||||||||||
Increase (Decrease) in Outstanding Losses | 2.2 | 2.7 | 54.6 | 647.2 | 42.8 | 22.3 | 11.1 | 42.4 | 110.7 | 714.6 | ||||||||||||||||||||||||||||||
Net Losses Incurred | 155.0 | 139.1 | 197.3 | 773.7 | 101.3 | 70.6 | 128.1 | 116.8 | 581.7 | 1,100.2 | ||||||||||||||||||||||||||||||
Expenses Incurred | 99.0 | 92.3 | 97.4 | 83.5 | 35.6 | 27.8 | 87.2 | 76.6 | 319.2 | 280.2 | ||||||||||||||||||||||||||||||
Dividends Incurred | (0.1 | ) | 0.0 | 0.0 | 0.0 | 3.0 | 6.6 | 0.0 | 0.0 | 2.9 | 6.6 | |||||||||||||||||||||||||||||
Underwriting Income (Loss) | $ | 18.3 | $ | (13.3 | ) | $ | 26.6 | $ | (601.7 | ) | $ | 5.5 | $ | 7.8 | $ | 31.2 | $ | (3.5 | ) | $ | 81.6 | $ | (610.7 | ) | ||||||||||||||||
Ratios After Dividends to Policyholders: | ||||||||||||||||||||||||||||||||||||||||
Loss | 56.9 | % | 63.8 | % | 61.4 | % | 302.8 | % | 71.2 | % | 66.5 | % | 52.0 | % | 61.5 | % | 59.2 | % | 143.0 | % | ||||||||||||||||||||
Expense | 35.8 | 39.2 | 29.4 | 30.3 | 22.9 | 25.3 | 34.4 | 32.1 | 31.4 | 32.6 | ||||||||||||||||||||||||||||||
Combined | 92.7 | % | 103.0 | % | 90.8 | % | 333.1 | % | 94.1 | % | 91.8 | % | 86.4 | % | 93.6 | % | 90.6 | % | 175.6 | |||||||||||||||||||||
Premiums Written as a % of Total | 9.7 | % | 10.2 | % | 11.6 | % | 11.9 | % | 5.6 | % | 5.0 | % | 8.9 | % | 10.3 | % | 35.8 | % | 37.4 | % | ||||||||||||||||||||
The Property and Casualty underwriting results for 2002 include the effect of losses of $625.0 million related to asbestos and toxic waste claims recognized in the third quarter. For the third quarter of 2002, excluding the effect of such losses, the combined loss and expense ratio was 88.5% for Casualty and 94.4% for Total Commercial.
Page 13 of 16
THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTER ENDED SEPTEMBER 30, 2003 AND 2002
(MILLIONS OF DOLLARS)
| Executive | Financial | Other | Total | Worldwide | ||||||||||||||||||||||||||||||||||||
| Protection | Institutions | Specialty | Specialty | Total | ||||||||||||||||||||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | |||||||||||||||||||||||||||||||
Net Premiums Written | $ | 525.0 | $ | 442.8 | $ | 182.8 | $ | 168.2 | $ | 428.4 | $ | 217.7 | $ | 1,136.2 | $ | 828.7 | $ | 2,845.5 | $ | 2,315.2 | ||||||||||||||||||||
Increase (Decrease) in Unearned Premiums | 35.8 | 33.0 | (6.1 | ) | 4.4 | 103.8 | 28.2 | 133.5 | 65.6 | 237.3 | 229.7 | |||||||||||||||||||||||||||||
Net Premiums Earned | 489.2 | 409.8 | 188.9 | 163.8 | 324.6 | 189.5 | 1,002.7 | 763.1 | 2,608.2 | 2,085.5 | ||||||||||||||||||||||||||||||
Net Losses Paid | 309.0 | 191.3 | 141.7 | 59.7 | 51.6 | 67.0 | 502.3 | 318.0 | 1,337.4 | 1,019.6 | ||||||||||||||||||||||||||||||
Increase (Decrease) in Outstanding Losses | 75.7 | 161.4 | 10.6 | 81.3 | 118.4 | 32.4 | 204.7 | 275.1 | 373.9 | 1,032.4 | ||||||||||||||||||||||||||||||
Net Losses Incurred | 384.7 | 352.7 | 152.3 | 141.0 | 170.0 | 99.4 | 707.0 | 593.1 | 1,711.3 | 2,052.0 | ||||||||||||||||||||||||||||||
Expenses Incurred | 134.2 | 116.3 | 54.4 | 47.5 | 150.2 | 68.6 | 338.8 | 232.4 | 876.7 | 719.6 | ||||||||||||||||||||||||||||||
Dividends Incurred | 0.0 | 0.0 | 1.7 | 1.9 | 1.4 | 0.5 | 3.1 | 2.4 | 6.0 | 9.0 | ||||||||||||||||||||||||||||||
Underwriting Income (Loss) | $ | (29.7 | ) | $ | (59.2 | ) | $ | (19.5 | ) | $ | (26.6 | ) | $ | 3.0 | $ | 21.0 | $ | (46.2 | ) | $ | (64.8 | ) | 14.2 | (695.1 | ) | |||||||||||||||
Increase in Deferred Acquisition Costs | 56.4 | 48.9 | ||||||||||||||||||||||||||||||||||||||
Adjusted Underwriting Income (Loss) | $ | 70.6 | $ | (646.2 | ) | |||||||||||||||||||||||||||||||||||
Ratios After Dividends to Policyholders: | ||||||||||||||||||||||||||||||||||||||||
Loss | 78.6 | % | 86.1 | % | 81.4 | % | 87.1 | % | 52.6 | % | 52.6 | % | 70.7 | % | 78.0 | % | 65.7 | % | 98.8 | % | ||||||||||||||||||||
Expense | 25.6 | 26.2 | 30.0 | 28.6 | 35.2 | 31.6 | 29.9 | 28.1 | 30.9 | 31.2 | ||||||||||||||||||||||||||||||
Combined | 104.2 | % | 112.3 | % | 111.4 | % | 115.7 | % | 87.8 | % | 84.2 | % | 100.6 | % | 106.1 | % | 96.6 | % | 130.0 | % | ||||||||||||||||||||
Premiums Written as a % of Total | 18.5 | % | 19.1 | % | 6.4 | % | 7.3 | % | 15.1 | % | 9.4 | % | 40.0 | % | 35.8 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||
The Property and Casualty underwriting results for 2002 include the effect of losses of $625.0 million related to asbestos and toxic waste claims recognized in the third quarter. For the third quarter of 2002, excluding the effect of such losses, the combined loss and expense ratio was 99.9% for Worldwide Total.
Page 14 of 16
THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTER ENDED SEPTEMBER 30, 2003 AND 2002
(MILLIONS OF DOLLARS)
| Worldwide | ||||||||||||||||||||||||
| United States | Foreign | Total | ||||||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | |||||||||||||||||||
Net Premiums Written | $ | 2,415.4 | $ | 1,962.2 | $ | 430.1 | $ | 353.0 | $ | 2,845.5 | $ | 2,315.2 | ||||||||||||
Increase (Decrease) in Unearned Premiums | 279.7 | 249.2 | (42.4 | ) | (19.5 | ) | 237.3 | 229.7 | ||||||||||||||||
Net Premiums Earned | 2,135.7 | 1,713.0 | 472.5 | 372.5 | 2,608.2 | 2,085.5 | ||||||||||||||||||
Net Losses Paid | 1,141.7 | 892.6 | 195.7 | 127.0 | 1,337.4 | 1,019.6 | ||||||||||||||||||
Increase (Decrease) in Outstanding Losses | 322.7 | 859.6 | 51.2 | 172.8 | 373.9 | 1,032.4 | ||||||||||||||||||
Net Losses Incurred | 1,464.4 | 1,752.2 | 246.9 | 299.8 | 1,711.3 | 2,052.0 | ||||||||||||||||||
Expenses Incurred | 719.2 | 584.8 | 157.5 | 134.8 | 876.7 | 719.6 | ||||||||||||||||||
Dividends Incurred | 6.0 | 9.0 | 0.0 | 0.0 | 6.0 | 9.0 | ||||||||||||||||||
Underwriting Income (Loss) | $ | (53.9 | ) | $ | (633.0 | ) | $ | 68.1 | $ | (62.1 | ) | 14.2 | (695.1 | ) | ||||||||||
Increase in Deferred Acquisition Costs | 56.4 | 48.9 | ||||||||||||||||||||||
Adjusted Underwriting Income (Loss) | $ | 70.6 | $ | (646.2 | ) | |||||||||||||||||||
Ratios After Dividends to Policyholders: | ||||||||||||||||||||||||
Loss | 68.8 | % | 102.8 | % | 52.3 | % | 80.5 | % | 65.7 | % | 98.8 | % | ||||||||||||
Expense | 29.8 | 29.9 | 36.6 | 38.2 | 30.9 | 31.2 | ||||||||||||||||||
Combined | 98.6 | % | 132.7 | % | 88.9 | % | 118.7 | % | 96.6 | % | 130.0 | % | ||||||||||||
Premiums Written as a % of Total | 84.9 | % | 84.8 | % | 15.1 | % | 15.2 | % | 100.0 | % | 100.0 | % | ||||||||||||
The Property and Casualty underwriting results for 2002 include the effect of losses of $625.0 million related to asbestos and toxic waste claims recognized in the third quarter. For the third quarter of 2002, excluding the effect of such losses, the combined loss and expense ratio was 96.1% for United States Total and 99.9% for Worldwide Total.
Page 15 of 16
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.
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 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 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. The Corporation evaluates the performance of its insurance businesses by using the combined loss and expense ratio calculated in accordance with statutory accounting principles applicable to property and casualty insurance companies. It is the sum of the ratio of losses 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.
Statutory accounting principles 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. To convert underwriting expenses to a GAAP basis, policy acquisition expenses are deferred and recognized over the period in which the related premiums are earned.
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