Chubb P/C Ratings Affirmed

The Chubb Corporation’s property/casualty subsidiaries’ financial strength ratings of “A++” have been affirmed by A.M. Best Co. The outlook for the ratings is stable.

Chubb’s superior operating performance, strong capitalization, conservative operating strategies, well-established franchise and sustainable competitive advantages within specialty insurance and upscale personal lines businesses influence the ratings. Moreover, Chubb maintains favorable loss ratios, sophisticated loss control expertise, disciplined underwriting and adherence to sound operating fundamentals.

Chubb maintains a stable balance sheet with modest financial leverage of 19 percent. The quality of capital is excellent based on reserve adequacy, consistency of earnings and superior liquidity, including substantial cash at the holding company. Chubb’s level of profitability provides fixed charge coverage that supports the ratings. Significant unregulated invested assets held at Chubb and its intermediate holding companies are sufficient to repay a large portion of outstanding debt and provide flexibility in terms of subsidiary capital adequacy.

Partially offsetting these positive rating factors are the underwriting deterioration and greater volatility that have occurred within Chubb’s specialty insurance and personal lines operations over the past several years, particularly within segments of its executive protection, health care and homeowners’ operations. A.M. Best’s opinion, 2002 and 2003 appear likely to be transition years for the company before improved underwriting fundamentals are solidly manifested within these lines. In addition, changes in Chubb’s senior management and the ongoing search for replacements in these key positions have resulted in some degree of uncertainty regarding corporate leadership, as well as strategic and operational changes.

Topics Property Casualty Chubb