| Document and Company Information (USD $) | ||
| 9 Months Ended
Sep. 30, 2009 | Jun. 30, 2008
| |
| Document and Company Information [Abstract] | ||
| Entity Registrant Name | CHUBB CORP | |
| Entity Central Index Key | 0000020171 | |
| Document Type | 10-Q | |
| Document Period End Date | 2009-09-30 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Well-known Seasoned Issuer | Yes | |
| Entity Voluntary Filers | No | |
| Entity Current Reporting Status | Yes | |
| Entity Filer Category | Large Accelerated Filer | |
| Entity Public Float | $17,629,416,359 | |
| Entity Common Stock, Shares Outstanding (actual number of shares) | 341,572,078 |
| Consolidated Statements of Income (USD $) | ||||
| In Millions, except Per Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
| Revenues | ||||
| Premiums Earned | $2,836 | $2,964 | $8,490 | $8,926 |
| Investment Income | 414 | 439 | 1,224 | 1,316 |
| Other Revenues | 1 | 13 | 7 | 25 |
| Realized Gains (Losses), Net | ||||
| Total Other-Than-Temporary Impairment Losses on Investments | (24) | (96) | (117) | (217) |
| Other-Than-Temporary Impairment Losses on Investments Recognized in Other Comprehensive Income | 4 | 0 | 19 | 0 |
| Other Realized Gains (Losses), Net | 89 | (17) | (72) | 96 |
| Total Realized Gains (Losses), Net | 69 | (113) | (170) | (121) |
| Total Revenues | 3,320 | 3,303 | 9,551 | 10,146 |
| Losses and Expenses | ||||
| Losses and Loss Expenses | 1,534 | 2,006 | 4,721 | 5,339 |
| Amortization of Deferred Policy Acquisition Costs | 775 | 781 | 2,260 | 2,336 |
| Other Insurance Operating Costs and Expenses | 116 | 104 | 321 | 330 |
| Investment Expenses | 11 | 8 | 27 | 25 |
| Other Expenses | 2 | 13 | 9 | 30 |
| Corporate Expenses | 73 | 73 | 221 | 210 |
| Total Losses and Expenses | 2,511 | 2,985 | 7,559 | 8,270 |
| Income Before Federal and Foreign Income Tax | 809 | 318 | 1,992 | 1,876 |
| Federal and Foreign Income Tax | 213 | 54 | 504 | 479 |
| Net Income | $596 | $264 | $1,488 | $1,397 |
| Net Income Per Share | ||||
| Basic | 1.7 | 0.74 | 4.21 | 3.84 |
| Diluted | 1.69 | 0.73 | 4.18 | 3.78 |
| Dividends Declared Per Share | 0.35 | 0.33 | 1.05 | 0.99 |
| Consolidated Balance Sheets (USD $) | ||
| In Millions | Sep. 30, 2009
| Dec. 31, 2008
|
| Assets | ||
| Short Term Investments | $2,587 | $2,478 |
| Fixed Maturities | ||
| Tax Exempt (cost $18,672 and $18,299) | 19,758 | 18,345 |
| Taxable (cost $15,957 and $14,592) | 16,510 | 14,410 |
| Equity Securities (cost $1,224 and $1,563) | 1,353 | 1,479 |
| Other Invested Assets | 1,838 | 2,026 |
| TOTAL INVESTED ASSETS | 42,046 | 38,738 |
| Cash | 61 | 56 |
| Accrued Investment Income | 452 | 435 |
| Premiums Receivable | 2,034 | 2,201 |
| Reinsurance Recoverable on Unpaid Losses and Loss Expenses | 2,142 | 2,212 |
| Prepaid Reinsurance Premiums | 318 | 373 |
| Deferred Policy Acquisition Costs | 1,545 | 1,532 |
| Deferred Income Tax | 340 | 1,144 |
| Goodwill | 467 | 467 |
| Other Assets | 1,373 | 1,271 |
| TOTAL ASSETS | 50,778 | 48,429 |
| Liabilities | ||
| Unpaid Losses and Loss Expenses | 22,902 | 22,367 |
| Unearned Premiums | 6,198 | 6,367 |
| Long Term Debt | 3,975 | 3,975 |
| Dividend Payable to Shareholders | 121 | 118 |
| Accrued Expenses and Other Liabilities | 2,064 | 2,170 |
| TOTAL LIABILITIES | 35,260 | 34,997 |
| Shareholders' Equity | ||
| Common Stock - $1 Par Value; 371,980,460 and 371,980,710 Shares | 372 | 372 |
| Paid-In Surplus | 209 | 253 |
| Retained Earnings | 15,658 | 14,509 |
| Accumulated Other Comprehensive Income (Loss) | 721 | (735) |
| Treasury Stock, at Cost - 30,408,382 and 19,726,097 Shares | (1,442) | (967) |
| TOTAL SHAREHOLDERS' EQUITY | 15,518 | 13,432 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $50,778 | $48,429 |
| Consolidated Balance Sheets (Parenthetical) (USD $) | ||
| In Millions, except Share data | Sep. 30, 2009
| Dec. 31, 2008
|
| Fixed Maturities | ||
| Tax Exempt, Cost | $18,672 | $18,299 |
| Taxable, Cost | 15,957 | 14,592 |
| Equity Securities, Cost | $1,224 | $1,563 |
| Shareholders' Equity | ||
| Common Stock, Par Value | 1 | 1 |
| Common Stock, Shares Issued | 371,980,460 | 371,980,710 |
| Treasury Stock, Shares | 30,408,382 | 19,726,097 |
| Consolidated Statements of Comprehensive Income (USD $) | ||||
| In Millions | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
| Net Income | $596 | $264 | $1,488 | $1,397 |
| Other Comprehensive Income (Loss), Net of Tax | ||||
| Change in Unrealized Appreciation or Depreciation of Investments | 813 | (350) | 1,328 | (814) |
| Change in Unrealized Other-Than-Temporary Impairment Losses on Investments | 3 | 0 | (6) | 0 |
| Foreign Currency Translation Gains (Losses) | 98 | (113) | 143 | (57) |
| Amortization of Net Loss and Prior Service Cost Included in Net Postretirement Benefit Costs | 9 | 8 | 21 | 18 |
| Total Other Comprehensive Income (Loss), Net of Tax | 923 | (455) | 1,486 | (853) |
| Comprehensive Income (Loss) | $1,519 | ($191) | $2,974 | $544 |
| Consolidated Statements of Cash Flows (USD $) | ||
| In Millions | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
| Cash Flows from Operating Activities | ||
| Net Income | $1,488 | $1,397 |
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||
| Increase in Unpaid Losses and Loss Expenses, Net | 306 | 793 |
| Decrease in Unearned Premiums, Net | (196) | (43) |
| Decrease in Premiums Receivable | 167 | 93 |
| Change in Income Tax Recoverable or Payable | (39) | (318) |
| Amortization of Premiums and Discounts on Fixed Maturities | 140 | 157 |
| Depreciation | 46 | 49 |
| Realized Investment Losses, Net | 170 | 121 |
| Other, Net | (236) | (105) |
| Net Cash Provided by Operating Activities | 1,846 | 2,144 |
| Cash Flows from Investing Activities | ||
| Proceeds from Fixed Maturities - Sales | 2,512 | 2,893 |
| Proceeds from Fixed Maturities - Maturities, Calls and Redemptions | 2,031 | 1,801 |
| Proceeds from Sales of Equity Securities | 368 | 267 |
| Purchases of Fixed Maturities | (5,838) | (5,486) |
| Purchases of Equity Securities | (13) | (163) |
| Investments in Other Invested Assets, Net | (1) | (102) |
| Increase in Short Term Investments, Net | (108) | (571) |
| Increase in Net Payable from Security Transactions Not Settled | 143 | 183 |
| Purchases of Property and Equipment, Net | (38) | (35) |
| Other, Net | 4 | 0 |
| Net Cash Used in Investing Activities | (940) | (1,213) |
| Cash Flows from Financing Activities | ||
| Proceeds from Issuance of Long Term Debt | 0 | 1,200 |
| Repayment of Long Term Debt | 0 | (685) |
| Proceeds from Issuance of Common Stock Under Stock-Based Employee Compensation Plans | 26 | 103 |
| Repurchase of Shares | (564) | (1,170) |
| Dividends Paid to Shareholders | (366) | (353) |
| Other, Net | 3 | (29) |
| Net Cash Used in Financing Activities | (901) | (934) |
| Net Increase (Decrease) in Cash | 5 | (3) |
| Cash at Beginning of Year | 56 | 49 |
| Cash at End of Period | $61 | $46 |
| General | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| General [Abstract] | |
| General | 1) General The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP)and include the accounts of The Chubb Corporation (Chubb) and its subsidiaries (collectively, the Corporation). Significant intercompany transactions have been eliminated in consolidation. Effective April1, 2009, the Corporation adopted new guidance issued by the Financial Accounting Standards Board (FASB)related to the recognition and presentation of other-than-temporary impairments. This guidance may not be retroactively applied to prior periods financial statements; accordingly, consolidated financial statements for periods prior to April1, 2009 have not been restated for this change in accounting policy. This accounting change is further described in Note (2). The amounts included in this report are unaudited but include those adjustments, consisting of normal recurring items, that management considers necessary for a fair presentation. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes in the Notes to Consolidated Financial Statements included in the Corporations Annual Report on Form 10-K for the year ended December31, 2008. The Corporation has performed an evaluation of subsequent events through November 6, 2009, which is the date the financial statements were issued. No significant subsequent events were identified. |
| Adoption of New Accounting Pronouncements | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Adoption of New Accounting Pronouncements [Abstract] | |
| Adoption of New Accounting Pronouncements | 2) Adoption of New Accounting Pronouncements Effective April1, 2009, the Corporation adopted new guidance issued by the FASB related to determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly. The FASB provided additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased. The FASB also included guidance on identifying circumstances that indicate a transaction is not orderly. The adoption of this guidance did not have a significant effect on the Corporations financial position or results of operations. Effective April1, 2009, the Corporation adopted new guidance issued by the FASB related to the recognition and presentation of other-than-temporary impairments. The FASB modified the guidance on the recognition of other-than-temporary impairments of debt securities. Under this guidance, an entity is required to recognize an other-than-temporary impairment when the entity concludes it has the intent to sell or it is more likely than not the entity will be required to sell an impaired debt security before the security recovers to its amortized cost value or it is likely the entity will not recover the entire amortized cost value of an impaired debt security. This guidance also changes the presentation in the financial statements of other-than-temporary impairments and provides for enhanced disclosures of both debt and equity securities. Under this guidance, if an entity has the intent to sell or it is more likely than not the entity will be required to sell an impaired debt security before the security recovers to its amortized cost value, the security is written down to fair value and the entire amount of the writedown is charged to income as a realized investment loss. For all other impaired debt securities, the impairment loss is separated into the amount representing the credit loss and the amount representing the loss related to all other factors. The portion of the impairment loss that represents the credit loss is charged to income as a realized investment loss and the amount representing the loss that relates to all other factors is included in other comprehensive income. This guidance requires a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption with a corresponding adjustment to accumulated other comprehensive income. The cumulative effect adjustment from adopting this guidance resulted in a $30million increase to retained earnings and a corresponding decrease to accumulated other comprehensive income. The adoption of this guidance did not have a significant effect on the Corporations financial position or results of operations. Effective January1, 2009, the Corporation adopted new guidance issued by the FASB related to the accounting for financial guarantee insurance contracts, which clarifies the guidance for such contracts. The adoption of this guidance did not have a significant effect on the Corporations financial position or results of operations. Effective January1, 2009, |
| Invested Assets | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Invested Assets [Abstract] | |
| Invested Assets | 3) Invested Assets (a) The amortized cost and fair value of invested assets were as follows: September 30, 2009 Gross Gross Amortized Unrealized Unrealized Fair Cost Appreciation Depreciation Value (in millions) Fixed maturities Tax exempt $ 18,672 $ 1,164 $ 78 $ 19,758 Taxable U.S. Government and government agency and authority obligations 631 22 2 651 Corporate bonds 3,787 262 11 4,038 Foreign bonds 7,864 338 21 8,181 Residential mortgage-backed securities 1,988 90 24 2,054 Commercial mortgage-backed securities 1,687 5 106 1,586 15,957 717 164 16,510 Total fixed maturities $ 34,629 $ 1,881 $ 242 $ 36,268 Equity securities $ 1,224 $ 213 $ 84 $ 1,353 At September30, 2009, the gross unrealized depreciation of fixed maturities included $15million of unrealized other-than-temporary impairment losses recognized in accumulated other comprehensive income. The amortized cost and fair value of fixed maturities at September30, 2009 by contractual maturity were as follows: Amortized Fair Cost Value (in millions) Due in one year or less $ 1,156 $ 1,175 Due after one year through five years 10,385 10,879 Due after five years through ten years 12,305 13,131 Due after ten years 7,108 7,443 30,954 32,628 Residential mortgage-backed securities 1,988 2,054 Commercial mortgage-backed securities 1,687 1,586 $ 34,629 $ 36,268 Actual maturities could differ from contractual maturities because borrowers may have the right to call or prepay obligations. (b)The components of unrealized appreciation or depreciation, including unrealized other-than-temporary impairment losses, of investments carried at fair value were as follows: September 30, 2009 (in millions) Fixed maturities Gross unrealized appreciation $ 1,881 Gross unrealized depreciation 242 1,639 Equity securities Gross unrealized appreciation 213 Gross unrealized depreciation 84 129 1,768 Deferred income tax liability 619 $ 1,149 When the fair value of any investment is lower than its cost, an assessment is made to determine whether the decline is temporary or other than temporary. The assessment of other-than-temporary impairment of fixed maturities and equity securities is based on both quantitative criteria and qualitative information and also considers a number of other factors including, but not limited to, the length of time and the extent to which the fair value has been less than the |
| Fair Values of Financial Instruments | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Fair Values of Financial Instruments [Abstract] | |
| Fair Values of Financial Instruments | 4) Fair Values of Financial Instruments Fair values of financial instruments are determined using valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Fair values are generally measured using quoted prices in active markets for identical assets or liabilities or other inputs, such as quoted prices for similar assets or liabilities, that are observable, either directly or indirectly. In those instances where observable inputs are not available, fair values are measured using unobservable inputs for the asset or liability. Unobservable inputs reflect the Corporations own assumptions about the assumptions that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. Fair value estimates derived from unobservable inputs are affected by the assumptions used, including the discount rates and the estimated amounts and timing of future cash flows. The derived fair value estimates cannot be substantiated by comparison to independent markets and are not necessarily indicative of the amounts that would be realized in a current market exchange. Certain financial instruments, particularly insurance contracts, are excluded from fair value disclosure requirements. The methods and assumptions used to estimate the fair values of financial instruments are as follows: (i) The carrying value of short term investments approximates fair value due to the short maturities of these investments. (ii) Fair values for fixed maturities are determined by management, utilizing prices obtained from an independent, nationally recognized pricing service or, in the case of securities for which prices are not provided by a pricing service, from independent brokers. For fixed maturities that have quoted prices in active markets, market quotations are provided. For fixed maturities that do not trade on a daily basis, the pricing services and brokers provide fair value estimates using a variety of inputs including, but not limited to, benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, reference data, prepayment spreads and measures of volatility. Management reviews on an ongoing basis the reasonableness of the methodologies used by the relevant pricing services and brokers. In addition, management, using the prices received for the securities from the pricing services and brokers, determines the aggregate portfolio price performance and reviews it against applicable indices. If management believes that significant discrepancies exist, it will discuss these with the relevant pricing service or broker to resolve the discrepancies. (iii) Fair values of equity securities are based on quoted market prices. (iv) Fair values of long term debt issued by Chubb are determined by management, utilizing prices obtained from an independent, nationally recognized pricing service. The carrying values and fair values of financial instruments were as follows: September 30, 2009 Carrying Fair Value Value (in millions) Assets |
| Segments Information | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Segments Information [Abstract] | |
| Segments Information | 5) Segments Information The principal business of the Corporation is the sale of property and casualty insurance. The profitability of the property and casualty insurance business depends on the results of both underwriting operations and investments, which are viewed as two distinct operations. The underwriting operations are managed and evaluated separately from the investment function. The property and casualty insurance subsidiaries (PC Group) underwrite most lines of property and casualty insurance. Underwriting operations consist of four separate business units: personal insurance, commercial insurance, specialty insurance and reinsurance assumed. The personal segment targets the personal insurance market. The personal classes include automobile, homeowners and other personal coverages. The commercial segment includes those classes of business that are generally available in broad markets and are of a more commodity nature. Commercial classes include multiple peril, casualty, workers compensation and property and marine. The specialty segment includes those classes of business that are available in more limited markets since they require specialized underwriting and claim settlement. Specialty classes include professional liability coverages and surety. The reinsurance assumed business is effectively in run-off following the sale, in 2005, of the ongoing business to a Bermuda-based reinsurance company, Harbor Point Limited. Corporate and other includes investment income earned on corporate invested assets, corporate expenses and the results of the Corporations non-insurance subsidiaries. Revenues and income before income tax of the operating segments were as follows: Periods Ended September 30 Third Quarter Nine Months 2009 2008 2009 2008 (in millions) Revenues Property and casualty insurance Premiums earned Personal insurance $ 930 $ 950 $ 2,754 $ 2,837 Commercial insurance 1,192 1,253 3,585 3,801 Specialty insurance 704 731 2,110 2,219 Total insurance 2,826 2,934 8,449 8,857 Reinsurance assumed 10 30 41 69 2,836 2,964 8,490 8,926 Investment income 400 418 1,180 1,254 Other revenues 4 Total property and casualty insurance 3,236 3,382 9,670 10,184 Corporate and other 15 34 51 83 Realized investment gains (losses), net 69 (113 ) (170 ) (121 ) Total revenues $ 3,320 $ 3,303 $ 9,551 $ 10,146 Income before income tax Property and casualty insurance Underwriting Personal insurance $ 166 $ (21 ) $ 409 $ 293 Commercial insurance 147 (51 ) 368 161 Specialty i |
| Contingent Liabilities | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Contingent Liabilities [Abstract] | |
| Contingent Liabilities | 6) Contingent Liabilities Chubb and certain of its subsidiaries have been involved in the investigations by various Attorneys General and other regulatory authorities of several states, the U.S. Securities and Exchange Commission, the U.S. Attorney for the Southern District of New York and certain non-U.S. regulatory authorities with respect to certain business practices in the property and casualty insurance industry including (1)potential conflicts of interest and anti-competitive behavior arising from the payment of contingent commissions to brokers and agents and (2)loss mitigation and finite reinsurance arrangements. In connection with these investigations, Chubb and certain of its subsidiaries received subpoenas and other requests for information from various regulators. The Corporation has cooperated fully with these investigations. The Corporation has settled with several state Attorneys General and insurance departments all issues arising out of their investigations. As described in more detail below, the Attorney General of Ohio in August2007 filed an action against Chubb and certain of its subsidiaries, as well as several other insurers and one broker, as a result of the Ohio Attorney Generals business practices investigation. Although no other Attorney General or regulator has initiated an action against the Corporation, it is possible that such an action may be brought against the Corporation with respect to some or all of the issues that are the focus of these ongoing investigations. Individual actions and purported class actions arising out of the investigations into the payment of contingent commissions to brokers and agents have been filed in a number of federal and state courts. On August1, 2005, Chubb and certain of its subsidiaries were named in a putative class action entitled In re Insurance Brokerage Antitrust Litigation in the U.S. District Court for the District of New Jersey (the N.J. District Court). This action, brought against several brokers and insurers on behalf of a class of persons who purchased insurance through the broker defendants, asserts claims under the Sherman Act and state law and the Racketeer Influenced and Corrupt Organizations Act (RICO)arising from the alleged unlawful use of contingent commission agreements. On September28, 2007, the N.J. District Court dismissed the second amended complaint filed by the plaintiffs in the In re Insurance Brokerage Antitrust Litigation in its entirety. In so doing, the court dismissed the plaintiffs Sherman Act and RICO claims with prejudice for failure to state a claim, and it dismissed the plaintiffs state law claims without prejudice because it declined to exercise supplemental jurisdiction over them. The plaintiffs have appealed the dismissal of their second amended complaint to the U.S. Court of Appeals for the Third Circuit, and that appeal is currently pending. Chubb and certain of its subsidiaries also have been named as defendants in other putative class actions relating or similar to the In re Insurance Brokerage Antitrust Litigation that have been filed in various state courts or in U.S. district courts between 2005 and 200 |
| Earnings Per Share | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Earnings Per Share [Abstract] | |
| Earnings Per Share | 7) Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share: Periods Ended September 30 Third Quarter Nine Months 2009 2008 2009 2008 (in millions, except for per share amounts) Basic earnings per share: Net income $ 596 $ 264 $ 1,488 $ 1,397 Weighted average shares outstanding 350.3 356.8 353.4 363.6 Basic earnings per share $ 1.70 $ .74 $ 4.21 $ 3.84 Diluted earnings per share: Net income $ 596 $ 264 $ 1,488 $ 1,397 Weighted average shares outstanding 350.3 356.8 353.4 363.6 Additional shares from assumed exercise of stock-based compensation awards 3.2 5.5 3.0 5.6 Weighted average shares and potential shares assumed outstanding for computing diluted earnings per share 353.5 362.3 356.4 369.2 Diluted earnings per share $ 1.69 $ .73 $ 4.18 $ 3.78 |
