Fitch Downgrades Chubb

February 20, 2002

Fitch has downgraded several ratings of The Chubb Corporation (Chubb) and removed the ratings 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 rating 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 Sept. 11 event followed by a large fourth quarter after-tax charge of $143 million from surety exposures related to Enron. In addition, holding company financial leverage also increased in 2001 as a $600 million debt offering in November increased the debt-to-total capital ratio to approximately 19 percent at year-end.

The ratings were originally placed on Rating Watch on Sept. 21 following the event of Sept. 11. Chubb’s most recently reported costs for this event 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 continue to reflect Chubb’s market position as a leading property/casualty insurer in several commercial and personal lines business segments, history of favorable underwriting performance, strong capital position at both the insurance subsidiary and parent holding company levels, conservative investment portfolio, and experienced management team.

Fitch believes that Chubb will show significant improvement in operating results for 2002 as the company is positioned to benefit from an environment characterized by rate increases in most insurance segments, and a return to more conservative underwriting practices marketwide.

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