Annual Report 2001 - Chubb Group of Insurance Companies

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13 Compound Annual Growth in Net Loss Reserves 1991–2001 8.8% Chubb Industry 1.9% Our low financial 0 Industry Chubb leverage is another The 1999 acquisition of Executive Risk added approximately $606 million to Chubb's reserves; the growth rate excluding this acquisition was 8.2%. Sources: A.M. Best Company, Insurance Services Office and Chubb estimates. significant competitive advantage, because it’s the most potent indicator of financial conservatism and strength. compromising underwriting standards. As a bastion of financial strength in an industry weakened by losses, we will be in a better position than most competitors to earn attractive profits in the coming years. Let me give you just a few illustrations of our superior competitive position. • First, loss reserves. I mentioned that the industry is underreserved, while we are adequately reserved. From 1991 to 2001, the industry increased its reserves by an average of only 1.9% a year compounded, compared to Chubb’s 8.8% a year. • Although not up to historic Chubb standards, our underwriting profitability over the last three years as measured by combined ratio was 6.4 percentage points better than the industry average. • Our low financial leverage is another significant competitive advantage, because it’s the most potent indicator of financial conservatism and strength. When it comes to leverage as indicated by debt to total capital, we are among the best of the major property and casualty insurers. 6
• Our integrated 31-country branch network gives customers access to seamless global service, Chubb values and local market expertise wherever they do business. By far, our biggest competitive advantage is our claim service. People and companies buy insurance to give them peace of mind and to satisfy certain obligations. The insurance policy is a promise to pay, and like all promises, it is only as good as the integrity of the one who makes the promise. Some people keep their promises when they have no alternative. They sometimes make their counterpart sweat for payment, and then they pay only as little as they can possibly get away with. Others keep their promises because they are people of integrity and it’s the right thing to do. We’ve been around for 120 years because the men and women of Chubb have assimilated and perpetuated our founders’ fundamental credo: that the promise to pay sometimes imposes a moral obligation that goes beyond the legal obligation. Most of our agents, brokers and customers know this, and we have abundant third-party confirmation of it. Recently, for example, Forbes fyi magazine rated ours the best insurance precisely because of our no-hassle claims philosophy. We are pleased that our long-standing conservative approach to balance sheet management is suddenly back in style. Despite a year with unprecedented challenges on the underwriting side of the business, we Despite a year with unprecedented challenges on the underwriting side of the business, we finished the year in very strong financial shape. Our reserves are adequate, our asset quality is extremely high, and our cash flow from operations, including investment income, remained robust in 2001. finished the year in very strong financial shape. Our reserves are adequate, our asset quality is extremely high, and our cash flow from operations, including investment income, remained robust in 2001. We also have the best underwriters, actuaries and claims professionals in the industry and the very best agents and brokers selling our products. 7
Page 1 and 2: THE CHUBB CORPORATION Annual Report
Page 3 and 4: Dean R. O’Hare, Chairman and Chie
Page 5 and 6: work in urban areas. Clearly, the a
Page 7: We will increase our presence in th
Page 11 and 12: DEFINING THE CHUBB BRAND Branding i
Page 13 and 14: CHUBB = GLOBAL REACH When you manuf
Page 15 and 16: CHUBB = THE MASTERPIECE POLICY Many
Page 17 and 18: CHUBB = STABILITY When the National
Page 19 and 20: CHUBB = FINANCIAL STRENGTH Protecti
Page 21 and 22: From southern Europe to Latin Ameri
Page 23 and 24: SUPPLEMENTARY FINANCIAL DATA Proper
Page 25 and 26: MANAGEMENT'S DISCUSSION AND ANALYSI
Page 27 and 28: The pre-tax costs of $645 million r
Page 29 and 30: the wake of heavy insurance industr
Page 31 and 32: a dramatic proliferation of water d
Page 33 and 34: underwriting results were proÑtabl
Page 35 and 36: In spite of the inherent imprecisio
Page 37 and 38: occurred, including both those know
Page 39 and 40: other marketable securities to prov
Page 41 and 42: Changes in unrealized market apprec
Page 43 and 44: At December 31, 2001 Total Estimate
Page 45 and 46: In November 2001, the Corporation s
Page 47 and 48: 1998 1997 1996 1995 1994 1993 1992
Page 49 and 50: 1998 1997 1996 1995 1994 1993 1992
Page 51 and 52: THE CHUBB CORPORATION Consolidated
Page 53 and 54: THE CHUBB CORPORATION Consolidated
Page 55 and 56: (d) Premium Revenues and Related Ex
Page 57 and 58: (3) Acquisitions and Dispositions (
Page 59 and 60:
The change in unrealized appreciati
Page 61 and 62:
Hazardous waste sites are another s
Page 63 and 64:
(c) Interest costs of $55.0 million
Page 65 and 66:
(13) Stock-Based Compensation Plans
Page 67 and 68:
(14) Employee BeneÑts The weighted
Page 69 and 70:
(17) Earnings Per Share Basic earni
Page 71 and 72:
(19) Fair Values of Financial Instr
Page 73 and 74:
In the event that any person or gro
Page 75 and 76:
QUARTERLY FINANCIAL DATA Summarized
Page 77 and 78:
CHUBB & SON, a division of Federal
Page 79 and 80:
Subsidiaries Property and Casualty
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Annual Report 2001 - Chubb Group of Insurance Companies

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