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Announcement:

Moody's affirms Chubb's debt and insurance financial strength ratings

Global Credit Research - 13 Apr 2011

Approximately $4 billion of debt securities affirmed.

New York, April 13, 2011 -- Moody's Investors Service has affirmed the ratings of The Chubb Corporation (NYSE: CB, "Chubb", A2 senior unsecured debt) and its U.S. operating companies (Aa2 insurance financial strength) with a stable outlook.

According to Moody's, the Aa2 insurance financial strength ratings of Chubb's U.S. operating subsidiaries reflect their distinction as a leading underwriter, particularly for high-end homeowners' insurance and professional liability insurance, as well as the group's disciplined underwriting and reserving practices, its solid and historically conservative financial management profile, and excellent financial flexibility.

"Chubb's franchise strength is corroborated by its strong underwriting margins," says Alan Murray, senior credit officer at Moody's and lead analyst for Chubb. Since 2006, Chubb's annual combined ratios have averaged in the low-to mid 80% range (including natural catastrophes), reflecting adept risk selection and product customization for those who are willing to pay for superior service.

Overall, Moody's believes that Chubb's operating subsidiaries remain strongly capitalized on a risk-adjusted basis, given its strong underwriting profitability and internal capital generation, and notwithstanding substantial share repurchases in recent years. Invested assets are high-quality and conservative, with alternative investments representing just approximately 5% of invested assets. With respect to reserve adequacy, Moody's notes Chubb's consistent track record of substantial margin for potential adverse development in its core reserves, which has supported earnings and capital strength. Financial flexibility remains excellent, reflecting Chubb's strong capital position and internal liquidity, as well as its demonstrated access to a broad range of debt (including long- and short-term), equity and hybrid capital markets.

These strengths are tempered by cyclical dynamics of the property/casualty industry, which has seen further rate declines for commercial insurance. In particular, absent reserve releases from prior years' loss provisions ($746 million pre-tax in 2010), Chubb's operating returns would have been more modest, reflecting higher recent accident year loss ratios. Moody's preliminary review of Chubb's reserves at year-end 2010 suggests a still ample reserve margin relative to prior years and to industry peers. Other aspects which temper Chubb's credit profile include significant catastrophe risk and lingering exposure to asbestos liabilities.

The following ratings have been affirmed with a stable outlook:

The Chubb Corporation - senior unsecured at A2, junior subordinated debt at A3(hyb), senior unsecured shelf at (P)A2, subordinate shelf at (P)A3; preferred stock shelf at (P)Baa1, commercial paper at P-1;

Chubb Capital Trusts I, II, III -- guaranteed trust preferred securities shelf at (P)A3(hyb);

Federal Insurance Company - insurance financial strength rating at Aa2;

Great Northern Insurance Company - insurance financial strength rating at Aa2;

Pacific Indemnity Company - insurance financial strength rating at Aa2;

Vigilant Insurance Company - insurance financial strength rating at Aa2;

Northwestern Pacific Indemnity Company - insurance financial strength rating at Aa2;

Chubb Insurance Company of New Jersey - insurance financial strength rating at Aa2;

Chubb Lloyds Insurance Company of Texas - insurance financial strength rating at Aa2;

Chubb Custom Insurance Company - insurance financial strength rating at Aa2;

Chubb Indemnity Insurance Company - insurance financial strength rating at Aa2;

Chubb National Insurance Company - insurance financial strength rating at Aa2;

Texas Pacific Indemnity Company - insurance financial strength rating at Aa2;

Executive Risk Indemnity, Inc. - insurance financial strength rating at Aa2;

Executive Risk Specialty Insurance Company - insurance financial strength rating at Aa2;

Chubb Atlantic Indemnity, Ltd. - insurance financial strength rating at Aa2.

The Chubb Corporation (NYSE: CB), based in Warren, New Jersey, USA, provides property and casualty insurance for personal and commercial customers worldwide through independent agents and brokers. It is one of the largest property and casualty insurers in the United States. For 2010, Chubb reported net income of $2.2 billion on net premiums earned of $11.2 billion. Shareholders' equity as of December 31, 2010 was $15.5 billion.

The principal methodology used in this rating was Moody's Global Rating Methodology for Property and Casualty Insurers, published in May 2010.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Moody's insurance financial strength ratings are opinions of the ability of insurance companies to pay senior policyholder claims and obligations.

For more information, please visit www.moodys.com/insurance

New York
Alan Murray
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Robert Riegel
MD - Insurance
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's affirms Chubb's debt and insurance financial strength ratings
No Related Data.

 

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