Annual Report 2001 - Chubb Group of Insurance Companies

a dramatic proliferation of water damage claims in 2001,
particularly in Texas, where state mandated policy
language has contributed to broader water damage
coverage. We are closely monitoring the water damage
issue in Texas and in other states where it is becoming a
growing concern. If necessary, we will reduce our
presence in states where we cannot attain rate adequacy
due to regulatory constraints or adverse loss trends.
Commercial Insurance
1997
1998
1999
2000
2001
Commercial Insurance
NET PREMIUMS WRITTEN (in millions of dollars)
Multiple Peril
Casualty
Workers’
Compensation
* Excludes Reinstatement Premiums Related to
September 11 Attack
$2,381
$2,340
$2,639
$2,563
$2,496*
Property
Marine
&
Net premiums from commercial insurance increased 7%
in 2001 compared with a 2% decrease in 2000. The
decrease in premiums in 2000 was the result of the
strategy we put in place in late 1998 to increase the
pricing in these classes and to not renew underperforming
business where we could not attain price adequacy.
As a result, retention levels were signiÑcantly below
historical levels during 2000. On the business that was
renewed, however, rates increased steadily. Rate
increases remained Ñrm in 2001. Premiums began to
increase in 2001 as retention levels improved, particularly
in the second half of the year. In addition, new
business accelerated in the fourth quarter. Exposure
growth, however, was minimal in 2001 due to the weak
economy.
140%
130%
120%
110%
100%
90%
80%
COMBINED LOSS & EXPENSE RATIOS
1997 1998 1999 2000 2001*
1996 1997 1998 1999 2000
* Excludes Impact of September 11 Attack
Property & Marine
Casualty
Multiple Peril
Workers’
Compensation
Multiple peril results were near breakeven in 2001
compared with unproÑtable results in 2000 and highly
unproÑtable results in 1999. The improvement in 2001
was principally in the liability component of this
business due to a lower frequency and severity of losses.
The improvement in 2000 occurred in both the
property and liability components due to a lower
Our commercial insurance business produced underwriting
losses in each of the past three years, but has shown
substantial improvement in each succeeding year. The frequency of large losses in both the United States and
improvement was due in large part to the cumulative overseas. Results in the property component in 2000
eÅect of the pricing increases and more stringent risk also beneÑted from an absence of catastrophe losses.
selection in recent years. The combined loss and
Conversely, results in 1999 were adversely aÅected by
expense ratio was 106.1% in 2001 compared with higher catastrophe losses. Catastrophe losses represented
114.2% in 2000 and 120.4% in 1999. 3.0 percentage points of the loss ratio for this class in
2001 and 9.2 percentage points in 1999. There were
Commercial insurance results, particularly in the casualty virtually no catastrophe losses in 2000.
classes, were adversely aÅected in each of the past three
years by incurred losses related to asbestos and toxic Results for our casualty business improved considerably
waste claims. Such losses were $61 million in 2001, $31 in 2001 compared with the prior two years, but
million in 2000 and $47 million in 1999. The higher remained unproÑtable. The improvement in 2001 was
incurred losses in 2001 were the result of adverse trends primarily in the automobile component of this business
in asbestos related exposure (see ""Loss Reserves''). and, to a lesser extent, the primary liability component.
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