Fitch Affirms The Chubb Corporation's Ratings

  Fitch Affirms The Chubb Corporation's Ratings

Business Wire

CHICAGO -- January 22, 2013

Fitch Ratings affirms all ratings for The Chubb Corporation (NYSE: CB)
(Chubb), including the 'AA-' Issuer Default Rating (IDR) and 'A+' senior debt
rating. Fitch has also affirmed the 'AA' Insurer Financial Strength ratings
(IFS) of Chubb's property/casualty insurance subsidiaries, which are led by
Federal Insurance Company (Federal). A full list of ratings follows at the end
of this release.

The Rating Outlook is Stable.

RATING SENSITIVITY/KEY RATING DRIVERS

The ratings continue to reflect Chubb's market position as a leading
property/casualty insurer, history of favorable underwriting performance,
strong capital position at both the insurance subsidiary and parent holding
company levels, and conservative investment portfolio. Chubb is the 13th
largest writer in the U.S. based on 2011 net written premiums. The company has
significant international operations as approximately 26% through nine months
of 2012 revenues were generated outside of the U.S. Operations are segmented
into personal, commercial and specialty operations, each of which has a track
record of consistent strong underwriting profitability.

Chubb has generated favorable profitability over the last five years as
demonstrated by an average annual combined ratio of 89.9% from 2008 through
nine months of 2012, and an average operating return on equity of 14.1% for
the same period. The company's net earnings for the first nine months of 2012
improved due largely to lower catastrophe losses. The company reported a
consolidated GAAP underwriting combined ratio of 90.1% for the period with
catastrophes accounting for 3.0 points to the combined ratio. This compares
favorably to a 97.1% combined ratio for the first nine months of 2011 that had
11.7 points of catastrophes. Net income for the first nine months of 2012 was
$1.4 billion which equates to a return on equity of 12.2%.

Fourth quarter 2012 results will be unfavorably affected by losses from
Hurricane Sandy. Chubb previously announced estimated Sandy net pretax losses
of $880 million or $570 million after tax which was approximately 3.6% of
consolidated GAAP equity at Sept. 30, 2012. Despite the losses incurred from
Sandy, the company is likely to still report a significant operating profit in
full year 2012.

The company's reported debt-to-total capital ratio was 20.2% at Sept. 30,
2012. Operating interest coverage (excluding realized investment gains)
remains highly favorable at 12.1x for the first nine months of 2012. Chubb has
significant resources available for debt servicing needs as the parent holding
company held approximately $2.2 billion of cash and other liquid assets at
September 30, 2012. The company also has significant insurance subsidiary
statutory dividend payment capacity to support parent holding company debt
servicing obligations. Chubb's insurance subsidiary capital adequacy as
measured by risk based capital, traditional operating leverage metrics, and
Fitch's Prism capital model remains very strong.

Chubb's debt ratings currently benefit from narrower notching from the IFS
rating due to lower leverage, strong interest coverage, and significant
liquidity at the holding company. The existing debt rating is sensitive to
future increases in financial leverage or reductions in debt servicing
capacity. Significant reductions in holding company liquid investments,
declines in statutory maximum dividend coverage below 5x - 6x, or a fall in
interest coverage consistently below 9x would lead to more traditional
notching in Chubb's ratings with the debt ratings moving down by one notch.

Other factors that could lead to consideration of a ratings downgrade include:

--A significant level of near-term earnings volatility which is outside the
historical average;

--A material weakening of operating company capital adequacy, through
operating losses, capital declines or a deterioration in reserve or asset
quality.

Chubb's rating could be considered for an upgrade under the following
circumstances:

--Sustained stronger profitability, especially relative to peers at the
current rating level and the industry aggregate, over the business cycle;

--Sustained conservatism within the company's overall risk management,
catastrophe profile, liquidity and capitalization, at both the holding company
and operating company.

Fitch has affirmed the following with a Stable Outlook:

The Chubb Corporation

--IDR at 'AA-';

--5.2% notes due April 2013 at 'A+';

--5.75% senior notes due May 2018 at 'A+';

--6.6% notes due August 2018 at 'A+';

--6.8% debentures due November 2031 at 'A+';

--6.0% senior notes due 2037 at 'A+';

--6.5% senior notes due May 2038 at 'A+';

--6.375% junior subordinated debentures due 2067 at 'A-';

--Short-term IDR at 'F1+';

--Commercial paper at 'F1+'.

Fitch has affirmed the following IFS ratings at 'AA' with a Stable Outlook:

Chubb's Property/Casualty Insurance subsidiaries:

--Federal Insurance Company;

--Chubb Custom Insurance Co;

--Chubb Indemnity Insurance Co.;

--Chubb National Insurance Co.;

--Great Northern Insurance Co.;

--Pacific Indemnity Co.;

--Vigilant Insurance Co.;

--Executive Risk Indemnity, Inc.;

--Executive Risk Specialty Insurance Co.;

--Chubb Insurance Company of Europe, S.E.;

--Chubb Insurance Company of Canada;

--Chubb Insurance Company of Australia Ltd.;

--Chubb Atlantic Indemnity Ltd.;

--Texas Pacific Indemnity Company;

--Northwestern Pacific Indemnity Company;

--Chubb Insurance Company of New Jersey;

--Chubb Lloyds Insurance Company of Texas.

Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology' (Jan. 11, 2013)

Applicable Criteria and Related Research:

Insurance Rating Methodology - Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=698731

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Contact:

Fitch Ratings
Primary Analyst:
Gerald B. Glombicki, CPA, +1-312-606-2354
Director
Fitch, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst:
Greg Dickerson, +1-212-908-0220
Director
or
Committee Chairperson:
Keith M. Buckley, CFA, +1-312-368-3211
Group Managing Director
or
Media Relations:
Brian Bertsch, New York, +1 212-908-0549
brian.bertsch@fitchratings.com
 
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