Chubb (CHB) 8-K Results of Operations and Financial Condition

Exhibit 99.2

The	Supplementary	December 31, 2006
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
December 31, 2006

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

THE CHUBB CORPORATION
SUPPLEMENTARY INVESTOR INFORMATION
TABLE OF CONTENTS
DECEMBER 31, 2006

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

THE CHUBB CORPORATION

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

AS OF DECEMBER 31

	2006			2005
	(in millions)
Invested Assets(at carrying value)
Short Term Investments	$	2,254		$	1,899
Fixed Maturities
Tax Exempt		17,748			15,955
Taxable		14,218			14,568
Equity Securities		1,957			1,169
Other Invested Assets		1,516			1,043
Total Invested Assets	$	37,693		$	34,634
Unrealized Appreciation of Fixed Maturities Carried at Amortized Cost	$	7		$	11
Capitalization
Long Term Debt	$	2,466		$	2,467
Shareholders’ Equity		13,863	(a)		12,407
Total Capitalization	$	16,329		$	14,874
DEBT AS A PERCENTAGE OF TOTAL CAPITALIZATION		15.1	%		16.6	%
Actual Common Shares Outstanding		411.3			418.1
Book Value Per Common Share	$	33.71	(a)	$	29.68
Book Value Per Common Share,with Available-for-Sale Fixed Maturities at Amortized Cost	$	33.38	(a)	$	29.13

(a) Effective December 31, 2006, the Corporation adopted Statement of Financial Accounting Standards (SFAS) No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R). The adoption of SFAS No. 158 decreased accumulated other comprehensive income, a component of shareholders’ equity, by $281 million or $0.68 per common share. Restatement of prior periods is not permitted.

Page 1 of 16

THE CHUBB CORPORATION

SHARE REPURCHASE ACTIVITY

	Periods Ended December 31
	Fourth		Twelve		From
	Quarter		Months		December 2005
	2006		2006		to December 31, 2006
	(dollars in millions, except per share amounts)
Cost of Shares Repurchased		$82		$1,257		$1,392
Average Cost Per Share		$53.15		$49.55		$49.44
Shares Repurchased		1,545,530		25,366,262		28,154,062

In December 2005, the Board of Directors authorized the repurchase of up to 28,000,000 shares of the Corporation’s common stock. As of December 31, 2006, no shares remained under the 2005 share repurchase authorization.

In December 2006, the Board of Directors authorized the repurchase of up to 20,000,000 additional shares of the Corporation’s common stock. The authorization has no expiration date. As of December 31, 2006, 19,845,938 shares remained under the 2006 share repurchase authorization.

Page 2 of 16

THE CHUBB CORPORATION

SUMMARY OF INVESTED ASSETS

AS OF DECEMBER 31

CORPORATE

	Cost or				Market				Carrying
	Amortized Cost				Value				Value
	2006		2005		2006		2005		2006		2005
					(in millions)
Short Term Investments	$	793	$	929	$	793	$	929	$	793	$	929
Taxable Fixed Maturities		1,160		1,355		1,138		1,338		1,138		1,338
Equity Securities		289		5		416		8		416		8
TOTAL	$	2,242	$	2,289	$	2,347	$	2,275	$	2,347	$	2,275

PROPERTY AND CASUALTY

	Cost or				Market				Carrying
	Amortized Cost				Value				Value
	2006		2005		2006		2005		2006		2005
					(in millions)
Short Term Investments	$	1,461	$	970	$	1,461	$	970	$	1,461	$	970
Fixed Maturities
Tax Exempt		17,449		15,654		17,755		15,966		17,748		15,955
Taxable		13,150		13,160		13,080		13,230		13,080		13,230
Common Stocks		1,235		988		1,502		1,106		1,502		1,106
Preferred Stocks		37		52		39		55		39		55
Other Invested Assets		1,516		1,043		1,516		1,043		1,516		1,043
TOTAL	$	34,848	$	31,867	$	35,353	$	32,370	$	35,346	$	32,359

Page 3 of 16

THE CHUBB CORPORATION

INVESTMENT INCOME AFTER TAXES

	PERIODS ENDED DECEMBER 31
	FOURTH QUARTER						TWELVE MONTHS
	2006			2005			2006			2005
	(in millions)
CORPORATE INVESTMENT INCOME	$	14		$	12		$	60		$	41
PROPERTY AND CASUALTY INVESTMENT INCOME
Dividends	$	18		$	10		$	52		$	40
Taxable Interest		114			109			454			415
Tax Exempt Interest		176			161			680			618
Investment Expenses		(4	)		(4	)		(20	)		(17	)
TOTAL	$	304		$	276		$	1,166		$	1,056
Effective Tax Rate		19.6	%		19.8	%		19.8	%		19.7	%
After Tax Annualized Yield		3.50	%		3.47	%		3.48	%		3.45	%

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

STATUTORY POLICYHOLDERS’ SURPLUS
AS OF DECEMBER 31

	2006		2005		2004
	(in millions)
Estimated Statutory Policyholders’ Surplus	$	11,250	$	8,910	$	7,848
Rolling Year Statutory Net Premiums Written		11,967		12,244		12,005
Ratio of Statutory Net Premiums Written to Policyholders’ Surplus		1.06:1		1.37:1		1.53:1

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

Page 4 of 16

THE CHUBB CORPORATION

PROPERTY AND CASUALTY

CHANGE IN NET UNPAID LOSSES
TWELVE MONTHS ENDED DECEMBER 31, 2006

											All Other
	Net Unpaid Losses							IBNR			Unpaid Losses
					Increase			Increase			Increase
	12/31/06		12/31/05		(Decrease)			(Decrease)			(Decrease)
	(in millions)
Personal Insurance
Automobile	$	425	$	418	$	7		$	11		$	(4	)
Homeowners		665		697		(32	)		(18	)		(14	)
Other		657		580		77			62			15
Total Personal		1,747		1,695		52			55			(3	)
Commercial Insurance
Multiple Peril		1,593		1,596		(3	)		29			(32	)
Casualty		5,213		4,837		376			373			3
Workers’ Compensation		1,740		1,551		189			147			42
Property and Marine		678		755		(77	)		(27	)		(50	)
Total Commercial		9,224		8,739		485			522			(37	)
Specialty Insurance
Professional Liability		7,288		6,777		511			548			(37	)
Surety		59		46		13			3			10
Total Specialty		7,347		6,823		524			551			(27	)
Total Insurance		18,318		17,257		1,061			1,128			(67	)
Reinsurance Assumed		1,381		1,456		(75	)		(123	)		48
Total	$	19,699	$	18,713	$	986		$	1,005		$	(19	)

Page 5 of 16

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2006 AND 2005
(MILLIONS OF DOLLARS)

	Personal												Other						Total
	Automobile						Homeowners						Personal						Personal
	2006			2005			2006			2005			2006			2005			2006			2005
Net Premiums Written	$	670		$	645		$	2,268		$	2,104		$	580		$	558		$	3,518		$	3,307
Increase (Decrease) in Unearned Premiums		4			10			92			74			13			6			109			90
Net Premiums Earned		666			635			2,176			2,030			567			552			3,409			3,217
Net Losses Paid		407			398			969			1,002			307			307			1,683			1,707
Increase (Decrease) in Outstanding Losses		7			39			(32	)		17			77			59			52			115
Net Losses Incurred		414			437			937			1,019			384			366			1,735			1,822
Expenses Incurred		189			170			716			653			179			167			1,084			990
Dividends Incurred		—			—			—			—			—			—			—			—
Statutory Underwriting Income (Loss)	$	63		$	28		$	523		$	358		$	4		$	19		$	590		$	405
Ratios After Dividends to Policyholders:
Loss		62.2	%		68.8	%		43.0	%		50.2	%		67.7	%		66.3	%		50.9	%		56.6	%
Expense		28.2			26.5			31.6			31.0			30.9			29.9			30.8			30.0
Combined		90.4	%		95.3	%		74.6	%		81.2	%		98.6	%		96.2	%		81.7	%		86.6	%
Premiums Written as a % of Total		5.6	%		5.2	%		18.9	%		17.1	%		4.8	%		4.5	%		29.3	%		26.8	%

Page 6 of 16

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2006 AND 2005
(MILLIONS OF DOLLARS)

													Commercial						Commercial
	Commercial						Commercial						Workers’						Property						Total
	Multiple Peril						Casualty						Compensation						and Marine						Commercial
	2006			2005			2006			2005			2006			2005			2006			2005			2006			2005
Net Premiums Written	$	1,290		$	1,286		$	1,731		$	1,755		$	901		$	930		$	1,203		$	1,059		$	5,125		$	5,030
Increase (Decrease) in Unearned Premiums		(2	)		(23	)		—			20			(7	)		6			55			7			46			10
Net Premiums Earned		1,292			1,309			1,731			1,735			908			924			1,148			1,052			5,079			5,020
Net Losses Paid		556			595			820			789			321			328			544			540			2,241			2,252
Increase (Decrease) in Outstanding Losses		(3	)		126			376			431			189			240			(77	)		138			485			935
Net Losses Incurred		553			721			1,196			1,220			510			568			467			678			2,726			3,187
Expenses Incurred		426			421			480			453			197			199			383			364			1,486			1,437
Dividends Incurred		—			—			—			—			27			20			—			—			27			20
Statutory Underwriting Income (Loss)	$	313		$	167		$	55		$	62		$	174		$	137		$	298		$	10		$	840		$	376
Ratios After Dividends to Policyholders:
Loss		42.8	%		55.1	%		69.1	%		70.3	%		57.9	%		62.9	%		40.7	%		64.5	%		53.9	%		63.8	%
Expense		33.0			32.7			27.7			25.8			22.5			21.9			31.8			34.3			29.2			28.6
Combined		75.8	%		87.8	%		96.8	%		96.1	%		80.4	%		84.8	%		72.5	%		98.8	%		83.1	%		92.4	%
Premiums Written as a % of Total		10.8	%		10.5	%		14.5	%		14.3	%		7.5	%		7.6	%		10.0	%		8.6	%		42.8	%		41.0	%

Page 7 of 16

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2006 AND 2005
(MILLIONS OF DOLLARS)

	Professional												Total
	Liability						Surety						Specialty
	2006			2005			2006			2005			2006			2005
Net Premiums Written	$	2,641		$	2,798		$	300		$	244		$	2,941		$	3,042
Increase (Decrease) in Unearned Premiums		(41	)		34			29			27			(12	)		61
Net Premiums Earned		2,682			2,764			271			217			2,953			2,981
Net Losses Paid		1,320			1,566			21			104			1,341			1,670
Increase (Decrease) in Outstanding Losses		511			589			13			(42	)		524			547
Net Losses Incurred		1,831			2,155			34			62			1,865			2,217
Expenses Incurred		620			612			93			82			713			694
Dividends Incurred		—			—			4			3			4			3
Statutory Underwriting Income (Loss)	$	231		$	(3	)	$	140		$	70		$	371		$	67
Ratios After Dividends to Policyholders:
Loss		68.3	%		78.0	%		12.8	%		28.7	%		63.2	%		74.4	%
Expense		23.5			21.8			31.4			34.2			24.3			22.9
Combined		91.8	%		99.8	%		44.2	%		62.9	%		87.5	%		97.3	%
Premiums Written as a % of Total		22.1	%		22.8	%		2.5	%		2.0	%		24.6	%		24.8	%

Page 8 of 16

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2006 AND 2005
(MILLIONS OF DOLLARS)

	Total						Reinsurance						Worldwide
	Insurance						Assumed						Total
	2006			2005			2006			2005			2006			2005
Net Premiums Written	$	11,584		$	11,379		$	390		$	904		$	11,974		$	12,283
Increase (Decrease) in Unearned Premiums		143			161			(127	)		(54	)		16			107
Net Premiums Earned		11,441			11,218			517			958			11,958			12,176
Net Losses Paid		5,265			5,629			323			280			5,588			5,909
Increase (Decrease) in Outstanding Losses		1,061			1,597			(75	)		307			986			1,904
Net Losses Incurred		6,326			7,226			248			587			6,574			7,813
Expenses Incurred		3,283			3,121			184			315			3,467			3,436
Dividends Incurred		31			23			—			—			31			23
Statutory Underwriting Income (Loss)	$	1,801		$	848		$	85		$	56		$	1,886		$	904
Increase in Deferred Acquisition Costs														19			17
GAAP Underwriting Income													$	1,905		$	921
Ratios After Dividends to Policyholders:
Loss		55.5	%		64.6	%		48.0	%		61.3	%		55.2	%		64.3	%
Expense		28.4			27.4			47.2			34.8			29.0			28.0
Combined		83.9	%		92.0	%		95.2	%		96.1	%		84.2	%		92.3	%
Premiums Written as a % of Total		96.7	%		92.6	%		3.3	%		7.4	%		100.0	%		100.0	%

Page 9 of 16

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2006 AND 2005
(MILLIONS OF DOLLARS)

													Worldwide
	United States						Foreign						Total
	2006			2005			2006			2005			2006			2005
Net Premiums Written	$	9,520		$	9,932		$	2,454		$	2,351		$	11,974		$	12,283
Increase (Decrease) in Unearned Premiums		(44	)		44			60			63			16			107
Net Premiums Earned		9,564			9,888			2,394			2,288			11,958			12,176
Net Losses Paid		4,828			4,885			760			1,024			5,588			5,909
Increase (Decrease) in Outstanding Losses		494			1,613			492			291			986			1,904
Net Losses Incurred		5,322			6,498			1,252			1,315			6,574			7,813
Expenses Incurred		2,652			2,676			815			760			3,467			3,436
Dividends Incurred		31			23			—			—			31			23
Statutory Underwriting Income (Loss)	$	1,559		$	691		$	327		$	213			1,886			904
Increase in Deferred Acquisition Costs														19			17
GAAP Underwriting Income													$	1,905		$	921
Ratios After Dividends to Policyholders:
Loss		55.8	%		65.9	%		52.3	%		57.5	%		55.2	%		64.3	%
Expense		27.9			27.0			33.2			32.3			29.0			28.0
Combined		83.7	%		92.9	%		85.5	%		89.8	%		84.2	%		92.3	%
Premiums Written as a % of Total		79.5	%		80.9	%		20.5	%		19.1	%		100.0	%		100.0	%

Page 10 of 16

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED DECEMBER 31, 2006 AND 2005
(MILLIONS OF DOLLARS)

	Personal												Other						Total
	Automobile						Homeowners						Personal						Personal
	2006			2005			2006			2005			2006			2005			2006			2005
Net Premiums Written	$	159		$	159		$	562		$	520		$	158		$	141		$	879		$	820
Increase (Decrease) in Unearned Premiums		(9	)		(3	)		3			(6	)		8			3			2			(6	)
Net Premiums Earned		168			162			559			526			150			138			877			826
Net Losses Paid		113			108			224			309			80			96			417			513
Increase (Decrease) in Outstanding Losses		(6	)		(9	)		17			(50	)		35			13			46			(46	)
Net Losses Incurred		107			99			241			259			115			109			463			467
Expenses Incurred		46			43			183			163			49			42			278			248
Dividends Incurred		—			—			—			—			—			—			—			—
Statutory Underwriting Income (Loss)	$	15		$	20		$	135		$	104		$	(14	)	$	(13	)	$	136		$	111
Ratios After Dividends to Policyholders:
Loss		63.7	%		61.1	%		43.1	%		49.3	%		76.7	%		79.2	%		52.8	%		56.6	%
Expense		28.9			27.2			32.6			31.2			31.0			29.9			31.6			30.2
Combined		92.6	%		88.3	%		75.7	%		80.5	%		107.7	%		109.1	%		84.4	%		86.8	%
Premiums Written as a % of Total		5.3	%		5.1	%		18.9	%		16.8	%		5.3	%		4.5	%		29.5	%		26.4	%

Page 11 of 16

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED DECEMBER 31, 2006 AND 2005
(MILLIONS OF DOLLARS)

													Commercial						Commercial
	Commercial						Commercial						Workers’						Property						Total
	Multiple Peril						Casualty						Compensation						and Marine						Commercial
	2006			2005			2006			2005			2006			2005			2006			2005			2006			2005
Net Premiums Written	$	322		$	351		$	428		$	434		$	207		$	204		$	305		$	281		$	1,262		$	1,270
Increase (Decrease) in Unearned Premiums		(1	)		16			(1	)		(4	)		(22	)		(29	)		12			(6	)		(12	)		(23	)
Net Premiums Earned		323			335			429			438			229			233			293			287			1,274			1,293
Net Losses Paid		180			180			270			238			74			80			124			184			648			682
Increase (Decrease) in Outstanding Losses		(56	)		(4	)		40			57			44			62			(14	)		(33	)		14			82
Net Losses Incurred		124			176			310			295			118			142			110			151			662			764
Expenses Incurred		104			108			133			113			50			47			97			89			384			357
Dividends Incurred		—			—			—			—			7			3			—			—			7			3
Statutory Underwriting Income (Loss)	$	95		$	51		$	(14	)	$	30		$	54		$	41		$	86		$	47		$	221		$	169
Ratios After Dividends to Policyholders:
Loss		38.4	%		52.6	%		72.2	%		67.2	%		53.2	%		62.1	%		37.5	%		52.9	%		52.3	%		59.3	%
Expense		32.3			30.9			31.1			26.0			25.0			23.3			31.8			31.4			30.6			28.1
Combined		70.7	%		83.5	%		103.3	%		93.2	%		78.2	%		85.4	%		69.3	%		84.3	%		82.9	%		87.4	%
Premiums Written as a % of Total		10.8	%		11.3	%		14.4	%		14.0	%		7.0	%		6.6	%		10.3	%		9.1	%		42.5	%		41.0	%

Page 12 of 16

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED DECEMBER 31, 2006 AND 2005
(MILLIONS OF DOLLARS)

	Professional												Total
	Liability						Surety						Specialty
	2006			2005			2006			2005			2006			2005
Net Premiums Written	$	699		$	763		$	75		$	66		$	774		$	829
Increase (Decrease) in Unearned Premiums		42			53			6			1			48			54
Net Premiums Earned		657			710			69			65			726			775
Net Losses Paid		483			463			14			42			497			505
Increase (Decrease) in Outstanding Losses		(55	)		88			(7	)		(38	)		(62	)		50
Net Losses Incurred		428			551			7			4			435			555
Expenses Incurred		163			152			23			22			186			174
Dividends Incurred		—			—			1			1			1			1
Statutory Underwriting Income (Loss)	$	66		$	7		$	38		$	38		$	104		$	45
Ratios After Dividends to Policyholders:
Loss		65.2	%		77.6	%		10.3	%		5.3	%		60.0	%		71.6	%
Expense		23.3			20.0			31.1			34.2			24.1			21.1
Combined		88.5	%		97.6	%		41.4	%		39.5	%		84.1	%		92.7	%
Premiums Written as a % of Total		23.5	%		24.7	%		2.5	%		2.1	%		26.0	%		26.8	%

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THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED DECEMBER 31, 2006 AND 2005
(MILLIONS OF DOLLARS)

	Total						Reinsurance						Worldwide
	Insurance						Assumed						Total
	2006			2005			2006			2005			2006			2005
Net Premiums Written	$	2,915		$	2,919		$	59		$	178		$	2,974		$	3,097
Increase (Decrease) in Unearned Premiums		38			25			(59	)		(7	)		(21	)		18
Net Premiums Earned		2,877			2,894			118			185			2,995			3,079
Net Losses Paid		1,562			1,700			87			55			1,649			1,755
Increase (Decrease) in Outstanding Losses		(2	)		86			(57	)		58			(59	)		144
Net Losses Incurred		1,560			1,786			30			113			1,590			1,899
Expenses Incurred		848			779			39			73			887			852
Dividends Incurred		8			4			—			—			8			4
Statutory Underwriting Income (Loss)	$	461		$	325		$	49		$	(1	)	$	510		$	324
Increase (Decrease) in Deferred Acquisition Costs														(21	)		7
GAAP Underwriting Income													$	489		$	331
Ratios After Dividends to Policyholders:
Loss		54.4	%		61.8	%		25.4	%		60.9	%		53.2	%		61.8	%
Expense		29.1			26.7			66.1			40.9			29.9			27.5
Combined		83.5	%		88.5	%		91.5	%		101.8	%		83.1	%		89.3	%
Premiums Written as a % of Total		98.0	%		94.2	%		2.0	%		5.8	%		100.0	%		100.0	%

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THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED DECEMBER 31, 2006 AND 2005
(MILLIONS OF DOLLARS)

													Worldwide
	United States						Foreign						Total
	2006			2005			2006			2005			2006			2005
Net Premiums Written	$	2,317		$	2,475		$	657		$	622		$	2,974		$	3,097
Increase (Decrease) in Unearned Premiums		(60	)		(23	)		39			41			(21	)		18
Net Premiums Earned		2,377			2,498			618			581			2,995			3,079
Net Losses Paid		1,431			1,436			218			319			1,649			1,755
Increase (Decrease) in Outstanding Losses		(157	)		126			98			18			(59	)		144
Net Losses Incurred		1,274			1,562			316			337			1,590			1,899
Expenses Incurred		669			660			218			192			887			852
Dividends Incurred		8			4			—			—			8			4
Statutory Underwriting Income (Loss)	$	426		$	272		$	84		$	52			510			324
Increase (Decrease) in Deferred Acquisition Costs														(21	)		7
GAAP Underwriting Income													$	489		$	331
Ratios After Dividends to Policyholders:
Loss		53.8	%		62.7	%		51.1	%		57.8	%		53.2	%		61.8	%
Expense		29.0			26.7			33.2			31.0			29.9			27.5
Combined		82.8	%		89.4	%		84.3	%		88.8	%		83.1	%		89.3	%
Premiums Written as a % of Total		77.9	%		79.9	%		22.1	%		20.1	%		100.0	%		100.0	%

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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, policy acquisition expenses are deferred and amortized over the period in which the related premiums are earned. Underwriting income (loss) determined in accordance with GAAP is defined as premiums earned less losses and loss expenses incurred and GAAP underwriting expenses incurred.

Property and Casualty Investment Income After Income Tax

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

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

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

Combined Ratio or Combined Loss and Expense Ratio

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

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