Annual Report 2005 - Chubb Group of Insurance Companies

Ratings
Chubb and its insurance subsidiaries are rated by major rating agencies. These ratings reÖect the
rating agency's opinion of our Ñnancial strength, operating performance, strategic position and ability
to meet our obligations to policyholders.
Credit ratings assess a company's ability to repay its debts. The following table summarizes the
Corporation's credit ratings from the major independent rating organizations as of March 10, 2006.
A.M. Best Standard & Poor's Moody's Fitch
Senior unsecured debt ratingÏÏÏÏÏÏÏÏÏÏÏ aa¿ A A2 A°
Commercial paper ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ AMB-1° A-1 P-1 F-1
Financial strength ratings assess an insurer's ability to meet its Ñnancial obligations to policyholders.
The following table summarizes our property and casualty subsidiaries' Ñnancial strength ratings
from the major independent rating organizations as of March 10, 2006.
A.M. Best Standard & Poor's Moody's Fitch
Financial strengthÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A°° AA Aa2 AA
Ratings are an important factor in establishing our competitive position in the insurance markets.
There can be no assurance that our ratings will continue for any given period of time or that they will
not be changed.
It is possible that positive or negative ratings actions by one or more of the rating agencies may
occur in the future. If our ratings were downgraded, we may incur higher borrowing costs and may
have more limited means to access capital. In addition, a downgrade in our Ñnancial strength ratings
could adversely aÅect the competitive position of our insurance operations, including a possible
reduction in demand for our products in certain markets.
Liquidity
Liquidity is a measure of our ability to generate suÇcient cash Öows to meet the short and long
term cash requirements of our business operations.
Our property and casualty operations provide liquidity in that premiums are generally received
months or even years before losses are paid under the policies purchased by such premiums.
Historically, cash receipts from operations, consisting of insurance premiums and investment income,
have provided more than suÇcient funds to pay losses, operating expenses and dividends to Chubb.
After satisfying our cash requirements, excess cash Öows are used to build the investment portfolio and
thereby increase future investment income.
Our strong underwriting results continued to generate substantial new cash in 2005. New cash
from operations available for investment by the property and casualty subsidiaries was approximately
$3.4 billion in 2005 compared with $3.8 billion in 2004 and $3.1 billion in 2003. New cash available in
2005 was lower than in 2004 due to a 17% increase in paid losses in 2005 whereas premium receipts
were only modestly higher compared with 2004. The increase in paid losses in 2005 was due primarily
to directors and oÇcers liability payments related to accident years 2002 and prior, payments related to
Hurricane Katrina and payments related to two surety claims. New cash available in 2004 was higher
than in 2003 due to growth in premium receipts in 2004 whereas paid losses were nearly Öat compared
with 2003.
In addition to cash from operations, the property and casualty subsidiaries received a capital
contribution of $800 million from Chubb in the second quarter of 2003.
Our property and casualty subsidiaries maintain investments in highly liquid, short-term and other
marketable securities to provide for immediate cash needs.
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