Annual Report 2005 - Chubb Group of Insurance Companies

In the event that any person or group acquires 20% or more of the outstanding shares of Chubb's common stock,
each right will entitle the holder, other than such person or group, to purchase that number of shares of Chubb's
common stock having a market value of two times the exercise price of the right. In the event that, following the
acquisition of 20% or more of Chubb's outstanding common stock by a person or group, the Corporation is acquired in
a merger or other business combination transaction or 50% or more of the Corporation's assets or earning power is sold,
each right will entitle the holder to purchase common stock of the acquiring company having a value equal to two times
the exercise price of the right. At any time after any person or group acquires 20% or more of Chubb's common stock,
but before such person or group acquires 50% or more of such stock, Chubb may exchange all or part of the rights,
other than the rights owned by such person or group, for shares of Chubb's common stock at an exchange ratio of one
share of common stock per right.
The rights do not have the right to vote or to receive dividends. The rights may be redeemed in whole, but not in
part, at a price of $0.01 per right by Chubb at any time until the tenth day after the acquisition of 20% or more of
Chubb's outstanding common stock by a person or group. The rights will expire at the close of business on
March 12, 2009, unless previously exchanged or redeemed by Chubb.
(e) The property and casualty insurance subsidiaries are required to Ñle annual statements with insurance regulatory
authorities prepared on an accounting basis prescribed or permitted by such authorities (statutory basis). For such
subsidiaries, statutory accounting practices diÅer in certain respects from GAAP.
A comparison of shareholders' equity on a GAAP basis and policyholders' surplus on a statutory basis is as follows:
December 31
2005 2004
GAAP Statutory GAAP Statutory
(in millions)
P&C GroupÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $12,147.0 $8,909.8 $11,159.9 $7,847.7
Corporate and otherÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 260.0 (1,033.5)
$12,407.0 $10,126.4
A comparison of GAAP and statutory net income (loss) is as follows:
Years Ended December 31
2005 2004 2003
GAAP Statutory GAAP Statutory GAAP Statutory
(in millions)
P&C Group ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,963.0 $1,896.9 $1,798.7 $1,664.1 $1,051.7 $915.6
Corporate and other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (137.1) (250.3) (242.9)
$1,825.9 $1,548.4 $ 808.8
(f) As a holding company, Chubb's ability to continue to pay dividends to shareholders and to satisfy its obligations,
including the payment of interest and principal on debt obligations, relies on the availability of liquid assets, which is
dependent in large part on the dividend paying ability of its property and casualty insurance subsidiaries. Various state
insurance laws restrict the Corporation's property and casualty insurance subsidiaries as to the amount of dividends they
may pay without the prior approval of regulatory authorities. The restrictions are generally based on net income and on
certain levels of policyholders' surplus as determined in accordance with statutory accounting practices. Dividends in
excess of such thresholds are considered ""extraordinary'' and require prior regulatory approval. During 2005, these
subsidiaries paid dividends to Chubb totaling $617.4 million.
The maximum dividend distribution that may be made by the property and casualty insurance subsidiaries to Chubb
during 2006 without prior regulatory approval is approximately $1.4 billion.
(19) Subsequent Event
On March 3, 2006, the Board of Directors approved a two-for-one stock split payable to shareholders of record on
March 31, 2006. The share and per share amounts in the consolidated Ñnancial statements have not been adjusted to
reÖect the stock split. Net income per share and the weighted average number of common and potential common shares
outstanding on a pro forma basis to reÖect the stock split were as follows:
Years Ended
December 31
2005 2004 2003
Net income per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $4.47 $4.01 $2.23
Weighted average number of common and potential common
shares outstanding (in millions)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 408.4 386.4 362.5
At the same time, the Board of Directors approved an increase in the number of authorized shares of Chubb's common
stock from 600 million shares to 1.2 billion shares.
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