Annual Report 2005 - Chubb Group of Insurance Companies

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CONTENTS ITEM DESCRIPTION PAGE PART I 1 Business 3 1A Risk Factors 12 1B Unresolved StaÅ Comments 17 2 Properties 17 3 Legal Proceedings 17 4 Submission of Matters to a Vote of Security Holders 18 PART II 5 Market for the Registrant's Common Stock and Related Stockholder Matters 20 6 Selected Financial Data 21 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 22 7A Quantitative and Qualitative Disclosures About Market Risk 57 8 Consolidated Financial Statements and Supplementary Data 60 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 60 9A Controls and Procedures 60 9B Other Information 60 PART III 10 Directors and Executive OÇcers of the Registrant 62 11 Executive Compensation 62 12 Security Ownership of Certain BeneÑcial Owners and Management and Related Stockholder Matters 62 13 Certain Relationships and Related Transactions 62 14 Principal Accountant Fees and Services 62 PART IV 15 Exhibits, Financial Statements and Schedules 63 Signatures 64 Index to Financial Statements and Financial Statement Schedules F-1 Exhibits Index E-1 2
Item 1. Business General PART I. The Chubb Corporation (Chubb) was incorporated as a business corporation under the laws of the State of New Jersey in June 1967. Chubb and its subsidiaries are referred to collectively as the Corporation. Chubb is a holding company for a family of property and casualty insurance companies known informally as the Chubb Group of Insurance Companies (the P&C Group). Since 1882, the P&C Group has provided property and casualty insurance to businesses and individuals around the world. According to A.M. Best, the P&C Group is the 10th largest U.S. property and casualty insurance group based on 2004 net written premiums. At December 31, 2005, the Corporation had total assets of $48.1 billion and shareholders' equity of $12.4 billion. Revenues, income before income tax and assets for each operating segment for the three years ended December 31, 2005 are included in Note (14) of the Notes to Consolidated Financial Statements. The Corporation employed approximately 10,800 persons worldwide on December 31, 2005. The Corporation's principal executive oÇces are located at 15 Mountain View Road, Warren, New Jersey 07059, and our telephone number is (908) 903-2000. The Corporation's internet address is www.chubb.com. The Corporation's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports Ñled or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge on this website as soon as reasonably practicable after they have been electronically Ñled with or furnished to the Securities and Exchange Commission. Chubb's Corporate Governance Guidelines, charters of certain key committees of its Board of Directors, Restated CertiÑcate of Incorporation, By-Laws, Code of Business Conduct and Code of Ethics for CEO and Senior Financial OÇcers are also available on the Corporation's website or by writing to the Corporation's Corporate Secretary. Property and Casualty Insurance The P&C Group is divided into four strategic business units. Chubb Commercial Insurance oÅers a full range of commercial customer insurance products, including coverage for multiple peril, casualty, workers' compensation and property and marine. Chubb Commercial Insurance is known for writing niche business, where our expertise can add value for our agents, brokers and policyholders. Chubb Specialty Insurance oÅers a wide variety of specialized professional liability products for privately and publicly owned companies, Ñnancial institutions, professional Ñrms and healthcare organizations. Chubb Specialty Insurance also includes our surety business. Chubb Personal Insurance oÅers products for individuals with Ñne homes and possessions who require more coverage choices and higher limits than standard insurance policies. Reinsurance Assumed includes the business produced by Chubb Re. In December 2005, the Corporation transferred its ongoing reinsurance assumed business to Harbor Point Limited. For a further discussion of this transaction, see the Property and Casualty Insurance ÌTransfer of Ongoing Reinsurance Assumed Business section of Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A). The P&C Group provides insurance coverages principally in the United States, Canada, Europe, Australia, and parts of Latin America and Asia. Revenues of the P&C Group by geographic area for the three years ended December 31, 2005 are included in Note (14) of the Notes to Consolidated Financial Statements. The principal members of the P&C Group are Federal Insurance Company (Federal), PaciÑc Indemnity Company (PaciÑc Indemnity), Vigilant Insurance Company (Vigilant), Great Northern Insurance Company (Great Northern), Chubb Custom Insurance Company (Chubb Custom), Chubb National Insurance Company (Chubb National), Chubb Indemnity Insurance Company (Chubb Indemnity), Chubb Insurance Company of New Jersey (Chubb New Jersey), Texas PaciÑc Indemnity Company, Northwestern PaciÑc Indemnity Company, Executive Risk Indemnity Inc. (Executive Risk 3
Page 1 and 2: THE CHUBB CORPORATION Annual Report
Page 3 and 4: Letter to Shareholders John D. Finn
Page 5 and 6: Letter to Shareholders John J. Degn
Page 7 and 8: Letter to Shareholders With the imp
Page 9 and 10: Letter to Shareholders • In Janua
Page 11 and 12: Featured in this year’s report ar
Page 13 and 14: California From the moment they dec
Page 15: Pennsylvania Among acoustic guitari
Page 18 and 19: Canada Ellen Moore, Canada Aglobal
Page 20 and 21: Nebraska Timothy Szerlong, U.S. Nor
Page 22 and 23: Employee Profiles Meet six Chubb ma
Page 24 and 25: Chubb & Son, a division of Federal
Page 26 and 27: The Chubb Corporation Directors Zo
Page 30 and 31: Indemnity), Executive Risk Specialt
Page 32 and 33: those reinsurers with strong balanc
Page 34 and 35: ANALYSIS OF LOSS AND LOSS ADJUSTMEN
Page 36 and 37: that is of value to the insured. Th
Page 38 and 39: Another area of potential regulatio
Page 40 and 41: However, there are inherent limitat
Page 42 and 43: Intense competition for our product
Page 44 and 45: Purported class actions arising out
Page 46 and 47: PART II. Item 5. Market for the Reg
Page 48 and 49: Item 7. Management's Discussion and
Page 50 and 51: ‚the eÅects of disclosures by, a
Page 52 and 53: PROPERTY AND CASUALTY INSURANCE A s
Page 54 and 55: Net premiums written by business un
Page 56 and 57: loss ratio. Losses from catastrophe
Page 58 and 59: premiums, multiple peril premiums w
Page 60 and 61: Our specialty insurance business pr
Page 62 and 63: District of New York. We are cooper
Page 64 and 65: Our loss reserves include signiÑca
Page 66 and 67: We regularly review the loss reserv
Page 68 and 69: theory, insurance coverage is deeme
Page 70 and 71: The following table presents the nu
Page 72 and 73: alance sheets and superior underwri
Page 74 and 75: On an after-tax basis, property and
Page 76 and 77: CORPORATE AND OTHER Corporate and o
Page 78 and 79:
The writedowns of Ñxed maturities
Page 80 and 81:
Ratings Chubb and its insurance sub
Page 82 and 83:
The above table also excludes estim
Page 84 and 85:
At December 31, 2004 Total Estimate
Page 86 and 87:
Item 8. Consolidated Financial Stat
Page 88 and 89:
PART III. Item 10. Directors and Ex
Page 90 and 91:
SIGNATURES Pursuant to the requirem
Page 92 and 93:
THE CHUBB CORPORATION INDEX TO FINA
Page 94 and 95:
THE CHUBB CORPORATION Consolidated
Page 96 and 97:
THE CHUBB CORPORATION Consolidated
Page 98 and 99:
NOTES TO CONSOLIDATED FINANCIAL STA
Page 100 and 101:
In 2005, the Corporation transferre
Page 102 and 103:
(b) The components of unrealized ap
Page 104 and 105:
(7) Unpaid Losses and Loss Expenses
Page 106 and 107:
In establishing toxic waste reserve
Page 108 and 109:
(b) Interest costs of $134.8 millio
Page 110 and 111:
(11) Stock-Based Employee Compensat
Page 112 and 113:
The following table sets forth the
Page 114 and 115:
(13) Commitments and Contingent Lia
Page 116 and 117:
Revenues, income before income tax
Page 118 and 119:
(17) Fair Values of Financial Instr
Page 120 and 121:
In the event that any person or gro
Page 122 and 123:
THE CHUBB CORPORATION Schedule I CO
Page 124 and 125:
THE CHUBB CORPORATION Schedule II (
Page 126 and 127:
THE CHUBB CORPORATION Schedule III
Page 128 and 129:
Exhibit Number THE CHUBB CORPORATIO
Page 130 and 131:
Exhibit Number Description 10.18 Am
Page 132 and 133:
Exhibit Number Description 10.44 Fo
Page 134 and 135:
Exhibit 23.1 THE CHUBB CORPORATION
Page 136 and 137:
Exhibit 31.2 I, Michael O'Reilly, c
Page 138 and 139:
Exhibit 32.2 CERTIFICATION OF PERIO
Page 140:
The Chubb Corporation • Annual Re
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Annual Report 2005 - Chubb Group of Insurance Companies

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