CHUBB CORP - FORM 8-K - EX-99.2

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8-K - FORM 8-K - CHUBB CORP	y89244e8vk.htm
EX-99.3 - EX-99.3 - CHUBB CORP	y89244exv99w3.htm
EX-99.1 - EX-99.1 - CHUBB CORP	y89244exv99w1.htm

Exhibit 99.2


The Chubb Corporation		Supplementary Investor Information		December 31, 2010


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
DECEMBER 31, 2010


	Page
The Chubb Corporation:
Consolidated Balance Sheet Highlights		1
Share Repurchase Activity		2

Summary of Invested Assets:
Corporate		3
Property and Casualty		3

Investment Income After Taxes:
Corporate		4
Property and Casualty		4

Property and Casualty Insurance Group:
Statutory Policyholders’ Surplus		4
Change in Net Unpaid Losses		5
Underwriting Results — Year-To-Date		6-10
Underwriting Results — Quarterly		11-15

Definitions of Key Terms		16-17

THE CHUBB CORPORATION

CONSOLIDATED BALANCE SHEET HIGHLIGHTS
AS OF DECEMBER 31

(in millions, except per share amounts)


	2010						2009
				% of Total						% of Total
Invested Assets (at carrying value)
Short Term Investments	$	1,905			4	%	$	1,918			5	%
Fixed Maturities
Tax Exempt		19,774			47			19,587			47
Taxable		16,745			40			16,991			40
Equity Securities		1,550			4			1,433			3
Other Invested Assets		2,239			5			2,075			5

Total Invested Assets	$	42,213			100	%	$	42,004			100	%


Unrealized Appreciation of Investments
Fixed Maturities	$	1,458					$	1,388
Equity Securities		265						218

		1,723						1,606
Deferred Income Tax Liability		603						562

	$	1,120					$	1,044


Capitalization
Long Term Debt	$	3,975					$	3,975
Shareholders’ Equity		15,530						15,634

Total Capitalization	$	19,505					$	19,609


Debt as a Percentage of Total Capitalization		20.4	%					20.3	%

Actual Common Shares Outstanding		297.3						332.0

Book Value Per Common Share	$	52.24					$	47.09

Book Value Per Common Share, with Available-for-Sale Fixed Maturities at Amortized Cost	$	49.05					$	44.37

Page 1 of 17

THE CHUBB CORPORATION

SHARE REPURCHASE ACTIVITY
(dollars in millions, except per share amounts)


	Periods Ended December 31
	Fourth		Twelve		From
	Quarter		Months		December 2005
	2010		2010		to December 31, 2010
Cost of Shares Repurchased		$473		$2,008		$7,960

Average Cost Per Share		$58.28		$53.31		$50.86

Shares Repurchased		8,111,960		37,667,829		156,507,704

In December 2005 and December 2006, the Board of Directors authorized the repurchase of up to 28,000,000 shares and 20,000,000 shares, respectively, of the Corporation’s common stock. In March 2007, the Board of Directors authorized an increase of 20,000,000 shares to the authorization approved in December 2006. In December 2007, 2008 and 2009 the Board of Directors authorized the repurchase of up to 28,000,000 shares, 20,000,000 shares and 25,000,000 shares, respectively, of the Corporation’s common stock. In June 2010, the Board of Directors authorized an increase of 14,000,000 shares to the authorization approved in December 2009. No shares remain under these share repurchase authorizations.

In December 2010, the Board of Directors authorized the repurchase of up to 30,000,000 shares of the Corporation’s common stock. The authorization has no expiration date. As of December 31, 2010, 28,492,296 shares remained under the share repurchase authorization.

Page 2 of 17

THE CHUBB CORPORATION

SUMMARY OF INVESTED ASSETS
AS OF DECEMBER 31

CORPORATE


	Cost or				Carrying
	Amortized Cost				Value (a)
	2010		2009		2010		2009
	(in millions)
Short Term Investments	$	817	$	1,017	$	817	$	1,017
Taxable Fixed Maturities		1,154		1,286		1,197		1,327
Equity Securities		205		205		171		202
Other Invested Assets		23		25		23		25


TOTAL	$	2,199	$	2,533	$	2,208	$	2,571

PROPERTY AND CASUALTY


	Cost or				Carrying
	Amortized Cost				Value (a)
	2010		2009		2010		2009
	(in millions)
Short Term Investments	$	1,088	$	901	$	1,088	$	901
Fixed Maturities
Tax Exempt		19,072		18,720		19,774		19,587
Taxable		14,835		15,184		15,548		15,664
Equity Securities		1,080		1,010		1,379		1,231
Other Invested Assets		2,216		2,050		2,216		2,050


TOTAL	$	38,291	$	37,865	$	40,005	$	39,433


(a)		Short term investments are carried at amortized cost, which approximates fair value. Fixed maturities and equity securities are carried at fair value. Other invested assets include private equity limited partnerships carried at Chubb’s equity in the net assets of the partnerships.

Page 3 of 17

THE CHUBB CORPORATION

INVESTMENT INCOME AFTER TAXES


	Periods Ended December 31
	Fourth Quarter						Twelve Months
	2010			2009			2010			2009
	(in millions)
CORPORATE INVESTMENT INCOME	$	9		$	13		$	47		$	40


PROPERTY AND CASUALTY INVESTMENT INCOME
Tax Exempt Interest	$	192		$	192		$	761		$	755
Taxable Interest		118			119			469			465
Other		15			13			52			55
Investment Expenses		(5	)		(7	)		(21	)		(23	)


TOTAL	$	320		$	317		$	1,261		$	1,252


Effective Tax Rate		19.2	%		19.3	%		19.1	%		19.2	%

After-Tax Annualized Yield		3.33	%		3.34	%		3.29	%		3.39	%

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

STATUTORY POLICYHOLDERS’ SURPLUS
AS OF DECEMBER 31


	2010		2009		2008
	(in millions)
Estimated Statutory Policyholders’ Surplus	$	14,500	$	14,526	$	12,281
Rolling Year Statutory Net Premiums Written	$	11,262	$	11,074	$	11,759
Ratio of Statutory Net Premiums Written to Policyholders’ Surplus		0.78:1		0.76:1		0.96:1

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

Page 4 of 17

THE CHUBB CORPORATION

PROPERTY AND CASUALTY

CHANGE IN NET UNPAID LOSSES
TWELVE MONTHS ENDED DECEMBER 31, 2010


											All Other
	Net Unpaid Losses							IBNR			Unpaid Losses
					Increase			Increase			Increase
	12/31/10		12/31/09		(Decrease)			(Decrease)			(Decrease)
					(in millions)
Personal Insurance
Automobile	$	395	$	400	$	(5	)	$	(32	)	$	27
Homeowners		692		665		27			40			(13	)
Other		877		872		5			8			(3	)

Total Personal		1,964		1,937		27			16			11

Commercial Insurance
Multiple Peril		1,705		1,615		90			41			49
Casualty		6,141		5,988		153			222			(69	)
Workers’ Compensation		2,234		2,138		96			90			6
Property and Marine		819		758		61			57			4

Total Commercial		10,899		10,499		400			410			(10	)

Specialty Insurance
Professional Liability		7,388		7,552		(164	)		(78	)		(86	)
Surety		58		58		—			2			(2	)

Total Specialty		7,446		7,610		(164	)		(76	)		(88	)

Total Insurance		20,309		20,046		263			350			(87	)
Reinsurance Assumed		592		740		(148	)		(105	)		(43	)


Total	$	20,901	$	20,786	$	115		$	245		$	(130	)

Page 5 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2010 AND 2009
(DOLLARS IN MILLIONS)

Personal

Other

Total

Automobile

Homeowners

Personal

2010

2009

2010

2009

2010

2009

2010

2009

Net Premiums Written

638

577

2,382

2,339

805

741

3,825

3,657

Decrease (Increase) in Unearned Premiums

(22

)

(14

)

(21

)

(57

)

Net Premiums Earned

616

579

2,368

2,374

784

739

3,768

3,692

Net Losses Paid

384

352

1,361

1,195

439

393

2,184

1,940

Increase (Decrease) in Outstanding Losses

)

(64

)

(17

)

Net Losses Incurred

376

355

1,386

1,131

448

437

2,210

1,923

Expenses Incurred

190

168

791

766

274

235

1,255

1,169

Dividends Incurred

—

Statutory Underwriting Income

191

477

303

600

Ratios After Dividends to Policyholders:

Loss

61.0

61.3

58.5

47.6

57.2

59.1

58.7

52.1

Expense

29.8

29.1

33.2

32.8

34.0

31.7

32.8

32.0

Combined

90.8

90.4

91.7

80.4

91.2

90.8

91.5

84.1

Premiums Written as a % of Total

5.7

5.2

21.2

21.1

7.1

6.7

34.0

33.0

Page 6 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2010 AND 2009
(DOLLARS IN MILLIONS)

Commercial

Workers’

Property

Total

Multiple Peril

Casualty

Compensation

and Marine

Commercial

2010

2009

2010

2009

2010

2009

2010

2009

2010

2009

Net Premiums Written

1,094

1,121

1,532

1,514

756

761

1,294

1,264

4,676

4,660

Decrease (Increase) in Unearned Premiums

)

(20

)

(19

)

(10

)

(29

)

102

Net Premiums Earned

1,113

1,153

1,523

1,569

736

786

1,275

1,254

4,647

4,762

Net Losses Paid

555

566

791

834

386

375

657

710

2,389

2,485

Increase (Decrease) in Outstanding Losses

162

231

102

145

(96

)

418

288

Net Losses Incurred

644

574

953

1,065

488

520

722

614

2,807

2,773

Expenses Incurred

403

404

446

437

184

182

438

434

1,471

1,457

Dividends Incurred

—

Statutory Underwriting Income

175

124

115

206

347

510

Ratios After Dividends to Policyholders:

Loss

57.9

49.8

62.6

67.9

68.3

68.1

56.6

49.0

60.7

58.5

Expense

36.8

36.0

29.1

28.8

25.1

24.6

33.9

34.3

31.6

31.4

Combined

94.7

85.8

91.7

96.7

93.4

92.7

90.5

83.3

92.3

89.9

Premiums Written as a % of Total

9.8

10.1

13.6

13.7

6.7

6.9

11.5

11.4

41.6

42.1

Page 7 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2010 AND 2009
(DOLLARS IN MILLIONS)

Professional

Total

Liability

Surety

Specialty

2010

2009

2010

2009

2010

2009

Net Premiums Written

2,398

2,413

329

326

2,727

2,739

Decrease (Increase) in Unearned Premiums

Net Premiums Earned

2,448

2,498

339

331

2,787

2,829

Net Losses Paid

1,635

1,410

1,654

1,431

Increase (Decrease) in Outstanding Losses

(151

)

184

—

)

(151

)

175

Net Losses Incurred

1,484

1,594

1,503

1,606

Expenses Incurred

651

635

115

108

766

743

Dividends Incurred

—

Statutory Underwriting Income

313

269

199

205

512

474

Ratios After Dividends to Policyholders:

Loss

60.6

63.8

5.7

3.7

54.0

56.9

Expense

27.2

26.3

35.6

33.7

28.2

27.2

Combined

87.8

90.1

41.3

37.4

82.2

84.1

Premiums Written as a % of Total

21.4

21.8

2.9

24.3

24.7

Page 8 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2010 AND 2009
(DOLLARS IN MILLIONS)

Total

Reinsurance

Worldwide

Insurance

Assumed

Total

2010

2009

2010

2009

2010

2009

Net Premiums Written

11,228

11,056

11,236

11,077

Decrease (Increase) in Unearned Premiums

(26

)

227

(21

)

254

Net Premiums Earned

11,202

11,283

11,215

11,331

Net Losses Paid

6,227

5,856

127

150

6,354

6,006

Increase (Decrease) in Outstanding Losses

293

446

(148

)

(184

)

145

262

Net Losses Incurred

6,520

6,302

(21

)

(34

)

6,499

6,268

Expenses Incurred

3,492

3,369

3,496

3,377

Dividends Incurred

—

Statutory Underwriting Income

1,162

1,584

1,192

1,658

Increase (Decrease) in Deferred Acquisition Costs

(27

)

GAAP Underwriting Income

1,222

1,631

Ratios After Dividends to Policyholders:

Loss

58.3

56.0

58.1

55.4

Expense

31.2

30.5

31.2

30.6

Combined

89.5

86.5

89.3

86.0

Premiums Written as a % of Total

99.9

99.8

0.1

0.2

100.0


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

Page 9 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2010 AND 2009
(DOLLARS IN MILLIONS)

Outside

the

Worldwide

United States

Total

2010

2009

2010

2009

2010

2009

Net Premiums Written

8,289

8,383

2,947

2,694

11,236

11,077

Decrease (Increase) in Unearned Premiums

300

(65

)

(46

)

(21

)

254

Net Premiums Earned

8,333

8,683

2,882

2,648

11,215

11,331

Net Losses Paid

5,006

4,834

1,348

1,172

6,354

6,006

Increase (Decrease) in Outstanding Losses

120

238

145

262

Net Losses Incurred

5,126

4,858

1,373

1,410

6,499

6,268

Expenses Incurred

2,446

2,437

1,050

940

3,496

3,377

Dividends Incurred

—

Statutory Underwriting Income

733

1,360

459

298

1,192

1,658

Increase (Decrease) in Deferred Acquisition Costs

(27

)

GAAP Underwriting Income

1,222

1,631

Ratios After Dividends to Policyholders:

Loss

61.7

56.1

47.6

53.2

58.1

55.4

Expense

29.6

29.2

35.6

34.9

31.2

30.6

Combined

91.3

85.3

83.2

88.1

89.3

86.0

Premiums Written as a % of Total

73.8

75.7

26.2

24.3

100.0

Page 10 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED DECEMBER 31, 2010 AND 2009
(DOLLARS IN MILLIONS)


	Personal												Other						Total
	Automobile						Homeowners						Personal						Personal
	2010			2009			2010			2009			2010			2009			2010			2009
Net Premiums Written	$	164		$	149		$	587		$	568		$	212		$	190		$	963		$	907
Decrease (Increase) in Unearned Premiums		(6	)		1			10			27			1			3			5			31


Net Premiums Earned		158			150			597			595			213			193			968			938


Net Losses Paid		103			96			295			266			108			110			506			472
Increase (Decrease) in Outstanding Losses		(7	)		1			(26	)		(11	)		13			(6	)		(20	)		(16	)


Net Losses Incurred		96			97			269			255			121			104			486			456


Expenses Incurred		48			44			198			187			76			60			322			291

Dividends Incurred		—			—			—			—			—			—			—			—


Statutory Underwriting Income	$	14		$	9		$	130		$	153		$	16		$	29		$	160		$	191


Ratios After Dividends to Policyholders:

Loss		60.7	%		64.7	%		45.1	%		42.9	%		56.8	%		53.9	%		50.2	%		48.6	%
Expense		29.3			29.5			33.7			32.9			35.9			31.6			33.5			32.1


Combined		90.0	%		94.2	%		78.8	%		75.8	%		92.7	%		85.5	%		83.7	%		80.7	%


Premiums Written as a % of Total		5.8	%		5.4	%		20.6	%		20.4	%		7.4	%		6.8	%		33.8	%		32.6	%

Page 11 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED DECEMBER 31, 2010 AND 2009
(DOLLARS IN MILLIONS)


													Commercial						Commercial
	Commercial						Commercial						Workers’						Property						Total
	Multiple Peril						Casualty						Compensation						and Marine						Commercial
	2010			2009			2010			2009			2010			2009			2010			2009			2010			2009
Net Premiums Written	$	277		$	286		$	370		$	353		$	170		$	151		$	325		$	311		$	1,142		$	1,101
Decrease (Increase) in Unearned Premiums		3			(1	)		9			34			16			32			2			11			30			76


Net Premiums Earned		280			285			379			387			186			183			327			322			1,172			1,177


Net Losses Paid		148			157			207			229			95			95			191			183			641			664
Increase (Decrease) in Outstanding Losses		(5	)		(7	)		29			36			34			29			22			(38	)		80			20


Net Losses Incurred		143			150			236			265			129			124			213			145			721			684


Expenses Incurred		100			98			113			104			43			40			105			104			361			346

Dividends Incurred		—			—			—			—			5			5			—			—			5			5


Statutory Underwriting Income	$	37		$	37		$	30		$	18		$	9		$	14		$	9		$	73		$	85		$	142


Ratios After Dividends to Policyholders:

Loss		51.1	%		52.6	%		62.3	%		68.5	%		71.3	%		69.7	%		65.2	%		45.0	%		61.8	%		58.3	%
Expense		36.1			34.3			30.5			29.4			26.0			27.4			32.3			33.5			31.7			31.6


Combined		87.2	%		86.9	%		92.8	%		97.9	%		97.3	%		97.1	%		97.5	%		78.5	%		93.5	%		89.9	%


Premiums Written as a % of Total		9.7	%		10.3	%		13.0	%		12.7	%		5.9	%		5.4	%		11.4	%		11.2	%		40.0	%		39.6	%

Page 12 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED DECEMBER 31, 2010 AND 2009
(DOLLARS IN MILLIONS)


	Professional												Total
	Liability						Surety						Specialty
	2010			2009			2010			2009			2010			2009
Net Premiums Written	$	663		$	688		$	83		$	83		$	746		$	771
Decrease (Increase) in Unearned Premiums		(54	)		(49	)		2			(3	)		(52	)		(52	)


Net Premiums Earned		609			639			85			80			694			719


Net Losses Paid		470			412			5			7			475			419
Increase (Decrease) in Outstanding Losses		(85	)		2			(3	)		(2	)		(88	)		—


Net Losses Incurred		385			414			2			5			387			419


Expenses Incurred		169			170			29			28			198			198

Dividends Incurred		—			—			1			1			1			1


Statutory Underwriting Income	$	55		$	55		$	53		$	46		$	108		$	101


Ratios After Dividends to Policyholders:

Loss		63.2	%		64.8	%		2.4	%		6.3	%		55.8	%		58.4	%
Expense		25.5			24.7			35.4			34.2			26.6			25.7


Combined		88.7	%		89.5	%		37.8	%		40.5	%		82.4	%		84.1	%


Premiums Written as a % of Total		23.2	%		24.7	%		2.9	%		3.0	%		26.1	%		27.7	%

Page 13 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED DECEMBER 31, 2010 AND 2009
(DOLLARS IN MILLIONS)


	Total						Reinsurance						Worldwide
	Insurance						Assumed						Total
	2010			2009			2010			2009			2010			2009
Net Premiums Written	$	2,851		$	2,779		$	2		$	4		$	2,853		$	2,783
Decrease (Increase) in Unearned Premiums		(17	)		55			—			3			(17	)		58


Net Premiums Earned		2,834			2,834			2			7			2,836			2,841


Net Losses Paid		1,622			1,555			33			36			1,655			1,591
Increase (Decrease) in Outstanding Losses		(28	)		4			(40	)		(48	)		(68	)		(44	)


Net Losses Incurred		1,594			1,559			(7	)		(12	)		1,587			1,547


Expenses Incurred		881			835			—			1			881			836

Dividends Incurred		6			6			—			—			6			6


Statutory Underwriting Income	$	353		$	434		$	9		$	18			362			452


Decrease in Deferred Acquisition Costs														(6	)		(16	)


GAAP Underwriting Income													$	356		$	436


Ratios After Dividends to Policyholders:

Loss		56.3	%		55.1	%		*	%		*	%		56.1	%		54.6	%
Expense		31.0			30.1			*			*			30.9			30.1


Combined		87.3	%		85.2	%		*	%		*	%		87.0	%		84.7	%


Premiums Written as a % of Total		99.9	%		99.9	%		0.1	%		0.1	%		100.0	%		100.0	%


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

Page 14 of 17

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED DECEMBER 31, 2010 AND 2009
(DOLLARS IN MILLIONS)

Outside

the

Worldwide

United States

Total

2010

2009

2010

2009

2010

2009

Net Premiums Written

2,060

2,026

793

757

2,853

2,783

Decrease (Increase) in Unearned Premiums

(40

)

(35

)

(17

)

Net Premiums Earned

2,083

2,119

753

722

2,836

2,841

Net Losses Paid

1,284

1,231

371

360

1,655

1,591

Increase (Decrease) in Outstanding Losses

(62

)

(36

)

(68

)

(44

)

Net Losses Incurred

1,222

1,195

365

352

1,587

1,547

Expenses Incurred

598

588

283

248

881

836

Dividends Incurred

—

Statutory Underwriting Income

257

330

105

122

362

452

Decrease in Deferred Acquisition Costs

)

(16

)

GAAP Underwriting Income

356

436

Ratios After Dividends to Policyholders:

Loss

58.8

56.6

48.5

48.8

56.1

54.6

Expense

29.1

35.7

32.8

30.9

30.1

Combined

87.9

85.7

84.2

81.6

87.0

84.7

Premiums Written as a % of Total

72.2

72.8

27.8

27.2

100.0

Page 15 of 17

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 (loss), the after-tax appreciation or depreciation, including unrealized other-than-temporary impairment losses, of the Corporation’s available-for-sale fixed maturities, which are carried at fair value. The appreciation or depreciation of available-for-sale fixed maturities is subject to fluctuation due to changes in interest rates and therefore could distort the analysis of trends. Management believes that book value per common share with available-for-sale fixed maturities at amortized cost, a non-GAAP financial measure, is an important measure of the underlying equity attributable to one share of common stock.

Combined Loss and Expense Ratio or Combined Ratio

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

Page 16 of 17

THE CHUBB CORPORATION

Definitions of Key Terms

Operating Income

Operating income, a non-GAAP financial measure, is net income excluding after-tax realized investment gains and losses. Management uses operating income, among other measures, to evaluate its performance because the realization of investment gains and losses in any given period is largely discretionary as to timing and can fluctuate significantly, which could distort the analysis of trends.

Return on Equity and Operating Return on Equity

Return on equity is the ratio of annualized net income divided by average shareholders’ equity. Average shareholders’ equity is the average of the beginning and all quarter-end balances within the period.

Operating return on equity, a non-GAAP measure, is the ratio of annualized operating income divided by average shareholders’ equity excluding the after-tax unrealized appreciation or depreciation of investments. Consolidated shareholders’ equity includes, as part of accumulated other comprehensive income (loss), the after-tax appreciation or depreciation, including unrealized other-than-temporary impairment losses, of the Corporation’s available-for-sale fixed maturities and equity securities, which are carried at fair value. The appreciation or depreciation of available-for-sale fixed maturities and equity securities is subject to fluctuation and could distort the analysis of trends. Average shareholders’ equity excluding the after-tax unrealized appreciation or depreciation of investments is the average of the beginning and all quarter-end balances within the period. Management uses operating return on equity, among other measures, to assess the overall performance of the Corporation.


	Periods Ended December 31
	Fourth Quarter						Twelve Months
	2010			2009			2010			2009
	(dollars in millions)
Annualized Net Income	$	2,480		$	2,780		$	2,174		$	2,183
Average Shareholders’ Equity	$	15,755		$	15,576		$	15,683		$	14,578

Return on Equity		15.7	%		17.8	%		13.9	%		15.0	%

Annualized Operating Income	$	2,076		$	2,276		$	1,897		$	2,168
Average Shareholders’ Equity Excluding
Unrealized Appreciation or Depreciation	$	14,359		$	14,480		$	14,443		$	14,065

Operating Return on Equity		14.5	%		15.7	%		13.1	%		15.4	%

Page 17 of 17

Attached files

CHUBB CORP Reports

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