Annual Report 2005 - Chubb Group of Insurance Companies

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PART II. Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters The common stock of Chubb is listed and principally traded on the New York Stock Exchange (NYSE) under ""CB''. The following are the high and low closing sale prices as reported on the NYSE Composite Tape and the quarterly dividends declared per share for each quarter of 2005 and 2004. 2005 First Second Third Fourth Quarter Quarter Quarter Quarter Common stock prices HighÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $80.95 $86.28 $90.61 $98.13 Low ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 73.34 77.02 85.44 83.86 Dividends declaredÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ .43 .43 .43 .43 2004 First Second Third Fourth Quarter Quarter Quarter Quarter Common stock prices HighÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $73.66 $72.07 $71.37 $77.00 Low ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 66.59 66.35 64.00 64.80 Dividends declaredÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ .39 .39 .39 .39 At February 28, 2006, there were approximately 5,200 common shareholders of record. The declaration and payment of future dividends to Chubb's shareholders will be at the discretion of Chubb's Board of Directors and will depend upon many factors, including the Corporation's operating results, Ñnancial condition and capital requirements, and the impact of regulatory constraints discussed in Note (18)(f) of the Notes to Consolidated Financial Statements. The following table summarizes Chubb's stock repurchased each month in the quarter ended December 31, 2005. Total Number of Maximum Number of Total Shares Purchased as Shares that May Yet Be Number of Part of Publicly Purchased Under Shares Average Price Announced Plans or the Plans or Period Purchased(a) Paid Per Share Programs Programs(b) October 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì $ Ì Ì 3,287,100 November 2005 ÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì 3,287,100 December 2005 ÏÏÏÏÏÏÏÏÏÏÏÏ 1,393,900 96.81 1,393,900 12,606,100 (a) The stated amounts exclude 69,463 shares, 40,250 shares and 8,731 shares delivered to Chubb during the months of October 2005, November 2005 and December 2005, respectively, by employees of the Corporation in connection with the Corporation's stock-based employee compensation plans. (b) On December 8, 2005, the Board of Directors replaced an existing share repurchase program with a new program, which authorized the repurchase of up to 14,000,000 shares of common stock. The authorization has no expiration date. 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 this Annual Report have not been adjusted to reÖect the stock split. 20
Item 6. Selected Financial Data 2005 2004 2003 2002 2001 (in millions except for per share amounts) FOR THE YEAR Revenues Property and Casualty Insurance Premiums Earned ÏÏÏÏÏÏÏÏÏÏÏ $12,176.0 $11,635.7 $10,182.5 $ 8,085.3 $ 6,656.4 Investment Income ÏÏÏÏÏÏÏÏÏ 1,342.3 1,207.0 1,082.9 952.2 914.7 Corporate and OtherÏÏÏÏÏÏÏÏÏ 180.5 116.3 44.2 68.9 182.1 Realized Investment GainsÏÏÏÏ 383.5 218.2 84.4 33.9 .8 Total Revenues ÏÏÏÏÏÏÏÏÏÏÏÏ $14,082.3 $13,177.2 $11,394.0 $9,140.3 $ 7,754.0 Income Property and Casualty Insurance Underwriting Income (Loss)(a) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 920.6(e) $ 846.1(c) $ 104.5 $ (625.9)(b) $ (903.5)(b)(c) Investment Income ÏÏÏÏÏÏÏÏÏ 1,315.3 1,184.3 1,058.4 929.4 902.6 Other ChargesÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (.6) (4.7) (29.5) (25.3) (52.3) Property and Casualty Insurance Income (Loss) ÏÏÏ 2,235.3 2,025.7 1,133.4 278.2 (53.2) Chubb Financial Solutions Non-Insurance Business ÏÏÏÏ (6.2) (17.2) (126.9) (69.8) 9.2 Corporate and OtherÏÏÏÏÏÏÏÏÏ (165.6) (158.5) (157.3) (73.9) (22.8) Realized Investment GainsÏÏÏÏ 383.5 218.2 84.4 33.9 .8 Income (Loss) Before Income Tax ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,447.0 2,068.2 933.6 168.4 (66.0) Federal and Foreign Income Tax (Credit) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 621.1 519.8 124.8(d) (54.5)(d) (177.5) Net Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,825.9 $ 1,548.4 $ 808.8 $ 222.9 $ 111.5 Per Share Net Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 8.94 $ 8.01 $ 4.46 $ 1.29 $ .63 Dividends Declared on Common Stock ÏÏÏÏÏÏÏÏÏÏÏÏ 1.72 1.56 1.44 1.40 1.36 AT DECEMBER 31 Total Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $48,060.7 $44,260.3 $38,360.6 $34,080.9 $29,415.5 Long Term DebtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,467.3 2,813.7 2,813.9 1,959.1 1,351.0 Total Shareholders' EquityÏÏÏÏÏÏ 12,407.0 10,126.4 8,522.0 6,825.7 6,491.8 Book Value Per Share ÏÏÏÏÏÏÏÏÏÏ 59.36 52.55 45.33 39.87 38.17 (a) Underwriting income has been reduced by net losses of $35.0 million ($22.8 million after-tax or $0.11 per share) in 2005, $75.0 million ($48.8 million after-tax or $0.25 per share) in 2004, $250.0 million ($162.5 million after-tax or $0.90 per share) in 2003, $741.1 million ($481.7 million after-tax or $2.79 per share) in 2002 and $60.9 million ($39.6 million after-tax or $0.22 per share) in 2001 related to asbestos and toxic waste claims. (b) Underwriting income in 2001 has been reduced by net surety bond losses of $220.0 million ($143.0 million after-tax or $0.81 per share) related to the bankruptcy of Enron Corp. Underwriting income in 2002 has been increased by a reduction in net surety bond losses of $88.0 million ($57.2 million after-tax or $0.33 per share) resulting from the settlement of litigation related to Enron Corp. (c) Underwriting income in 2001 has been reduced by net costs of $635.0 million ($412.8 million after-tax or $2.35 per share) related to the September 11 attack. Underwriting income in 2004 has been increased by a reduction in net losses of $80.0 million ($52.0 million after-tax or $0.27 per share) related to the September 11 attack. (d) Federal and foreign income tax in 2002 included a $40.0 million ($0.23 per share) charge to establish a tax valuation allowance from not being able to recognize, for accounting purposes, certain U.S. tax beneÑts related to European losses. Federal and foreign income tax in 2003 included a $40.0 million ($0.22 per share) credit for the reversal of the tax valuation allowance established in 2002. (e) Underwriting income in 2005 has been reduced by net costs of $462.2 million ($300.4 million after-tax or $1.47 per share) related to Hurricane Katrina. 21
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 28 and 29: CONTENTS ITEM DESCRIPTION PAGE PART
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 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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