Annual Report 2001 - Chubb Group of Insurance Companies

The pre-tax costs of $645 million related to the
September 11 attack had three components. First, in
our insurance business, we incurred estimated net claims
and claim expenses of $555 million plus reinsurance
reinstatement costs of $50 million, for an aggregate cost
of $605 million. Second, in our reinsurance business
written through Chubb Re, which is included in other
specialty results, we incurred estimated net claims and
claim expenses of $110 million and recognized net
reinstatement premium revenue of $80 million, for a net
cost of $30 million. Finally, we recorded a $10 million
charge, included in other charges, as our share of the
losses publicly estimated by Hiscox plc, a U.K. insurer
in which we have a 28% interest.
Underwriting results by class of business for the years
ended December 31, 2001, 2000 and 1999 are presented
on page 22. In 2001, we formed three strategic business
units: Chubb Personal Insurance, Chubb Commercial
Insurance and Chubb Specialty Insurance. In conjunc-
tion with the formation of the strategic business units,
we have reclassiÑed property and marine business from
our specialty insurance segment to our commercial
insurance segment and also reclassiÑed some business
that was included within executive protection to multi-
ple peril. Prior year amounts have been reclassiÑed.
We estimate that our gross claims and claim expenses
from the September 11 attack were about $3 billion.
Most of the claims were from property exposure and
business interruption losses. We also had signiÑcant
workers' compensation losses. Our net claims and claim
expenses of $665 million were signiÑcantly lower than
the gross amount due to various reinsurance agreements.
Our property exposures were protected by facultative
reinsurance, a property per risk treaty that limited our
net loss per risk, and our property catastrophe treaty.
Our workers' compensation losses were protected by a
casualty catastrophe treaty and a casualty clash treaty.
Based on our review of our reinsurance programs, we
estimated the amount of reinsurance recoverable. We
believe the estimate is reasonable based on information
available at the present time. We have also modeled the
estimated recoveries by individual reinsurer. Based on
this analysis, we estimate that 98% of our reinsurance is
with reinsurers or markets rated investment grade or
rated A or better by A.M. Best Company.
Business interruption claims from the September 11
attack will take some time to settle, while potential
liability claims, if initiated, could take years to settle.
Given that, we have no evidence of any emerging issues
that would cause us to change our reserve estimates.
While it is possible that our estimate of ultimate net
losses related to the September 11 attack may change in
the future, we do not expect that any such change
1997
1998
1999
2000
2001
130%
120%
110%
100%
Total Property & Casualty Insurance
90%
80%
70%
NET PREMIUMS WRITTEN (in millions of dollars)
Commercial
1997
1998
Specialty
1999
2000
$5,448
$5,504
$5,701
Personal
* Excludes Reinstatement Premiums Related to
September 11 Attack
COMBINED LOSS & EXPENSE RATIOS
* Excludes Impact of September 11 Attack
2001*
$6,333
$6,931*
Commercial
Specialty
Personal
would have a material eÅect on the Corporation's
consolidated Ñnancial condition or liquidity.
UNDERWRITING RESULTS
Each of our underwriting segments was aÅected by the
September 11 attack. However, the greatest impact by
far was on our Ñnancial institutions business, which is
part of our specialty insurance segment. Due to the
distorting eÅect of the September 11 attack on our
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