Chubb Downgraded

Fitch Ratings downgraded several ratings of The Chubb Corporation (Chubb) and removed them from rating watch negative. The actions include lowering Chubb’s senior debt rating to “AA-” from “AA” and the insurer financial strength (IFS) ratings of Chubb’s insurance subsidiaries, which are led by Federal Insurance Company, to “AA+” from “AAA.” Fitch’s “F1+” rating for Chubb’s commercial paper program remains unchanged. The rating outlook is stable.

The action follows a combination of adverse events that occurred in the past year, including a deterioration in operating results in 2001 due to losses from the September 11 event, followed by a large fourth quarter after-tax charge of $143 million from surety exposures related to Enron. The ratings were originally placed on watch on Sept. 21, 2001. Chubb’s most recently reported 9/11 costs were $3.0 billion gross, $645 million pretax and net of reinsurance, and $420 million net of taxes and reinsurance. A large portion of the loss was from property and business interruption claims in the company’s financial institution segment.

The ratings reflect Chubb’s market position as a leading property/casualty insurer in several commercial and personal lines business segments—it was the nation’s 13th largest property/casualty insurer based on 2000 net written premium, as well as its history of favorable underwriting performance. Strong capital position at both the insurance subsidiary and parent holding company levels, conservative investment portfolio and the company’s experienced management team were also factors.

Topics Chubb