Document and Entity Information
Document and Entity Information (USD $) | ||
3 Months Ended
Mar. 31, 2010 | Jun. 30, 2009
| |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CHUBB CORP | |
Entity Central Index Key | 0000020171 | |
Document Type | 10-Q | |
Document Period End Date | 2010-03-31 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,010 | |
Document Fiscal Period Focus | Q1 | |
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 | $13,920,104,349 | |
Entity Common Stock, Shares Outstanding (actual number of shares) | 326,772,038 |
Consolidated Statements of Inco
Consolidated Statements of Income (USD $) | ||
In Millions, except Per Share data | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Revenues | ||
Premiums Earned | $2,782 | $2,826 |
Investment Income | 410 | 402 |
Other Revenues | 4 | 3 |
Realized Investment Gains (Losses), Net | ||
Total Other-Than-Temporary Impairment Losses on Investments | 0 | (59) |
Other-Than-Temporary Impairment Losses on Investments Recognized in Other Comprehensive Income | (1) | 0 |
Other Realized Investment Gains (Losses), Net | 128 | (207) |
Total Realized Investment Gains (Losses), Net | 127 | (266) |
Total Revenues | 3,323 | 2,965 |
Losses and Expenses | ||
Losses and Loss Expenses | 1,730 | 1,615 |
Amortization of Deferred Policy Acquisition Costs | 740 | 728 |
Other Insurance Operating Costs and Expenses | 115 | 103 |
Investment Expenses | 10 | 9 |
Other Expenses | 4 | 3 |
Corporate Expenses | 76 | 77 |
Total Losses and Expenses | 2,675 | 2,535 |
Income Before Federal and Foreign Income Tax | 648 | 430 |
Federal and Foreign Income Tax | 184 | 89 |
Net Income | $464 | $341 |
Net Income Per Share | ||
Basic | 1.39 | 0.96 |
Diluted | 1.39 | 0.95 |
Dividends Declared Per Share | 0.37 | 0.35 |
Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 12 Months Ended
Dec. 31, 2009 |
Assets | ||
Short Term Investments | $2,394 | $1,918 |
Fixed Maturities | ||
Tax Exempt (cost $18,604 and $18,720) | 19,462 | 19,587 |
Taxable (cost $16,184 and $16,470) | 16,825 | 16,991 |
Equity Securities (cost $1,221 and $1,215) | 1,497 | 1,433 |
Other Invested Assets | 2,151 | 2,075 |
TOTAL INVESTED ASSETS | 42,329 | 42,004 |
Cash | 51 | 51 |
Accrued Investment Income | 448 | 460 |
Premiums Receivable | 2,031 | 2,101 |
Reinsurance Recoverable on Unpaid Losses and Loss Expenses | 2,071 | 2,053 |
Prepaid Reinsurance Premiums | 329 | 308 |
Deferred Policy Acquisition Costs | 1,553 | 1,533 |
Deferred Income Tax | 149 | 272 |
Goodwill | 467 | 467 |
Other Assets | 1,442 | 1,200 |
TOTAL ASSETS | 50,870 | 50,449 |
Liabilities | ||
Unpaid Losses and Loss Expenses | 23,099 | 22,839 |
Unearned Premiums | 6,149 | 6,153 |
Long Term Debt | 3,975 | 3,975 |
Dividend Payable to Shareholders | 121 | 118 |
Accrued Expenses and Other Liabilities | 1,785 | 1,730 |
TOTAL LIABILITIES | 35,129 | 34,815 |
Contingent Liabilities (Note 6) | ||
Shareholders' Equity | ||
Common Stock - $1 Par Value; 371,980,460 Shares | 372 | 372 |
Paid-In Surplus | 158 | 224 |
Retained Earnings | 16,578 | 16,235 |
Accumulated Other Comprehensive Income | 812 | 720 |
Treasury Stock, at Cost - 45,208,422 and 39,972,796 Shares | (2,179) | (1,917) |
TOTAL SHAREHOLDERS' EQUITY | 15,741 | 15,634 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $50,870 | $50,449 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | ||
In Millions, except Share data | Mar. 31, 2010
| Dec. 31, 2009
|
Fixed Maturities | ||
Tax Exempt, Cost | $18,604 | $18,720 |
Taxable, Cost | 16,184 | 16,470 |
Equity Securities, Cost | $1,221 | $1,215 |
Shareholders' Equity | ||
Common Stock, Par Value | 1 | 1 |
Common Stock, Shares Issued | 371,980,460 | 371,980,460 |
Treasury Stock, Shares | 45,208,422 | 39,972,796 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Consolidated Statements of Comprehensive Income | ||
Net Income | $464 | $341 |
Other Comprehensive Income (Loss), Net of Tax | ||
Change in Unrealized Appreciation or Depreciation of Investments | 107 | 327 |
Change in Unrealized Other-Than-Temporary Impairment Losses on Investments | 3 | 0 |
Foreign Currency Translation Losses | (28) | (113) |
Amortization of Net Loss and Prior Service Cost Included in Net Postretirement Benefit Costs | 10 | 9 |
Total Other Comprehensive Income Net of Tax | 92 | 223 |
Comprehensive Income | $556 | $564 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Cash Flows from Operating Activities | ||
Net Income | $464 | $341 |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||
Increase in Unpaid Losses and Loss Expenses, Net | 298 | 106 |
Decrease in Unearned Premiums, Net | (17) | (83) |
Decrease in Premiums Receivable | 70 | 98 |
Amortization of Premiums and Discounts on Fixed Maturities | 46 | 47 |
Depreciation | 16 | 15 |
Realized Investment Losses (Gains), Net | (127) | 266 |
Other, Net | (129) | (240) |
Net Cash Provided by Operating Activities | 621 | 550 |
Cash Flows from Investing Activities | ||
Proceeds from Fixed Maturities - Sales | 1,000 | 855 |
Proceeds from Fixed Maturities - Maturities, Calls and Redemptions | 634 | 610 |
Proceeds from Sales of Equity Securities | 18 | 46 |
Purchases of Fixed Maturities | (1,342) | (1,958) |
Purchases of Equity Securities | (15) | 0 |
Investments in Other Invested Assets, Net | 8 | (22) |
Increase in Short Term Investments, Net | (471) | (104) |
Increase (Decrease) in Net Payable from Security Transactions Not Settled | (20) | 214 |
Purchases of Property and Equipment, Net | (13) | (12) |
Other, Net | 0 | 4 |
Net Cash Used in Investing Activities | (201) | (367) |
Cash Flows from Financing Activities | ||
Increase (Decrease) in Funds Held Under Deposit Contracts | 25 | (2) |
Proceeds from Issuance of Common Stock Under Stock-Based Employee Compensation Plans | 24 | 14 |
Repurchase of Shares | (351) | (77) |
Dividends Paid to Shareholders | (118) | (118) |
Net Cash Used in Financing Activities | (420) | (183) |
Net Increase in Cash | 0 | 0 |
Cash at Beginning of Year | 51 | 56 |
Cash at End of Period | $51 | $56 |
General
General | |
3 Months Ended
Mar. 31, 2010 | |
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 was not permitted to 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 (3)(b). 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, 2009. |
Adoption of New Accounting Pron
Adoption of New Accounting Pronouncements | |
3 Months Ended
Mar. 31, 2010 | |
Adoption of New Accounting Pronouncements [Abstract] | |
Adoption of New Accounting Pronouncements | 2) Adoption of New Accounting Pronouncement Effective January1, 2010, the Corporation adopted new guidance issued by the FASB related to the accounting for a variable interest entity (VIE). A company would consolidate a VIE, as the primary beneficiary, when a company has both of the following characteristics: (a)the power to direct the activities of a VIE that most significantly impact the VIEs economic performance and (b)the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. Ongoing reassessment of whether a company is the primary beneficiary of a VIE is required. The new guidance replaces the quantitative-based approach previously required for determining which company, if any, has a controlling financial interest in a VIE. The adoption of this guidance did not have a significant effect on the Corporations financial position or results of operations. The Corporation is involved in the normal course of business with VIEs primarily as a passive investor in residential mortgage-backed securities, commercial mortgage-backed securities and private equity limited partnerships issued by third party VIEs. The Corporation is not the primary beneficiary of these VIEs. The Corporations maximum exposure to loss with respect to these investments is limited to the investment carrying values included in the Corporations consolidated balance sheet and any unfunded partnership commitments. |
Invested Assets
Invested Assets | |
3 Months Ended
Mar. 31, 2010 | |
Invested Assets [Abstract] | |
Invested Assets | 3) Invested Assets (a)The amortized cost and fair value of fixed maturities and equity securities were as follows: March 31, 2010 Gross Gross Amortized Unrealized Unrealized Fair Cost Appreciation Depreciation Value (in millions) Fixed maturities Tax exempt $ 18,604 $ 916 $ 58 $ 19,462 Taxable U.S. Government and government agency and authority obligations 776 16 9 783 Corporate bonds 6,170 352 17 6,505 Foreign government and government agency obligations 5,847 216 10 6,053 Residential mortgage-backed securities 1,706 75 16 1,765 Commercial mortgage-backed securities 1,685 39 5 1,719 16,184 698 57 16,825 Total fixed maturities $ 34,788 $ 1,614 $ 115 $ 36,287 Equity securities $ 1,221 $ 314 $ 38 $ 1,497 December 31, 2009 Gross Gross Amortized Unrealized Unrealized Fair Cost Appreciation Depreciation Value (in millions) Fixed maturities Tax exempt $ 18,720 $ 933 $ 66 $ 19,587 Taxable U.S. Government and government agency and authority obligations 756 12 10 758 Corporate bonds 6,287 327 24 6,590 Foreign government and government agency obligations 5,903 221 11 6,113 Residential mortgage-backed securities 1,850 69 20 1,899 Commercial mortgage-backed securities 1,674 6 49 1,631 16,470 635 114 16,991 Total fixed maturities $ 35,190 $ 1,568 $ 180 $ 36,578 Equity securities $ 1,215 $ 261 $ 43 $ 1,433 At March31, 2010 and December31, 2009, the gross unrealized depreciation of fixed maturities included $12million and $15million, respectively, of unrealized other-than-temporary impairment losses recognized in accumulated other comprehensive income. The amortized cost and fair value of fixed maturities at March31, 2010 by contractual maturity were as follows: Amortized Fair Cost Value (in millions) Due in one year or less $ 1,279 $ 1,303 Due after one year through five years 10,750 11,252 Due after five years through ten years 12,090 12,752 Due after ten years 7,278 7,496 31,397 32,803 Residential mortgage-backed securities 1,706 1,765 Commercial mortgage-backed securities 1,685 1,719 |
Fair Values of Financial Instru
Fair Values of Financial Instruments | |
3 Months Ended
Mar. 31, 2010 | |
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 service 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 service and brokers. In addition, management, using the prices received for the securities from the pricing service 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: March 31, 2010 December 31, 2009 Carrying Fair Carrying Fair Value |
Segments Information
Segments Information | |
3 Months Ended
Mar. 31, 2010 | |
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: Three Months Ended March 31 2010 2009 (in millions) Revenues Property and casualty insurance Premiums earned Personal insurance $ 925 $ 907 Commercial insurance 1,152 1,198 Specialty insurance 701 701 Total insurance 2,778 2,806 Reinsurance assumed 4 20 2,782 2,826 Investment income 396 386 Total property and casualty insurance 3,178 3,212 Corporate and other 18 19 Realized investment gains (losses), net 127 (266 ) Total revenues $ 3,323 $ 2,965 Income (loss)before income tax Property and casualty insurance Underwriting Personal insurance $ (24 ) $ 112 Commercial insurance 43 98 Specialty insurance 150 125 Total insurance 169 335 Reinsurance assumed 13 25 182 360 Increase in deferred policy acquisition costs 22 16 Underwriting income 204 376 Investment income 387 379 Other income (charges) (7 ) 4 |
Contingent Liabilities
Contingent Liabilities | |
3 Months Ended
Mar. 31, 2010 | |
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. The Attorney General of Ohio on August24, 2007 filed an action in the Court of Common Pleas in Cuyahoga County, Ohio, 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. This action alleges violations of Ohios antitrust laws. In July2008, the court denied the Corporations and the other defendants motions to dismiss the Ohio Attorney Generals complaint. Since then discovery has been on-going. 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 were the focus of the business practice 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 (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 su |
Earnings Per Share
Earnings Per Share | |
3 Months Ended
Mar. 31, 2010 | |
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: Three Months Ended March 31 2010 2009 (in millions, except for per share amounts) Basic earnings per share: Net income $ 464 $ 341 Weighted average shares outstanding 332.8 355.3 Basic earnings per share $ 1.39 $ .96 Diluted earnings per share: Net income $ 464 $ 341 Weighted average shares outstanding 332.8 355.3 Additional shares from assumed exercise of stock-based compensation awards 2.2 3.0 Weighted average shares and potential shares assumed outstanding for computing diluted earnings per share 335.0 358.3 Diluted earnings per share $ 1.39 $ .95 |