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A.M. Best Affirms Ratings of The Chubb Corporation and Its Subsidiaries

  A.M. Best Affirms Ratings of The Chubb Corporation and Its Subsidiaries

Business Wire

OLDWICK, N.J. -- March 8, 2013

A.M. Best Co. has affirmed the financial strength rating (FSR) of A++
(Superior) and issuer credit ratings (ICR) of “aa+” of the property/casualty
subsidiaries of The Chubb Corporation (Chubb Corp) (NYSE: CB) also known as
the Chubb Group of Insurance Companies (Chubb Group). Concurrently, A.M. Best
has affirmed the ICR of “aa-”, all long-term debt and indicative ratings and
the AMB-1+ on the commercial paper of Chubb Corp. In addition, A.M. Best has
affirmed the FSR of A++ (Superior) and ICR of “aa+” of Chubb Atlantic
Indemnity Ltd. (Chubb Atlantic) (Pembroke, Bermuda). The outlook for all
ratings is stable, except for the commercial paper, which does not have an
outlook. All companies are headquartered in Warren, NJ, except where
specified. (See below for a detailed list of the companies and ratings.)

The ratings reflect the Chubb Group’s superior risk-adjusted capitalization,
excellent underwriting and overall operating performance and the sustainable
competitive advantages within its specialty and upscale personal insurance
businesses, which is demonstrated by its consistent outperformance of industry
peers. The ratings also recognize Chubb Group’s comprehensive and proactive
enterprise risk management, disciplined underwriting practices, strong
franchise recognition and access to the capital markets through Chubb Corp.
The group’s positive rating attributes are enhanced by its position as a
leading insurer in the United States and its global presence in specialty
markets.

The strength of Chubb Group’s balance sheet is derived from its consistent
generation of underwriting profits, despite the recent impact of catastrophes
and competitive market conditions and a well-diversified book of business,
which has led to excellent risk-adjusted capitalization. Chubb Group’s results
also benefit from an above average total return on invested assets and strong
underwriting and operating cash flows.

These positive rating factors are partially offset by challenging market
conditions and catastrophe and weather-related losses, which have impacted
underwriting performance in each of the last three years. Catastrophe losses
added approximately six, nine and 10 points to the group’s combined ratios for
2010, 2011 and 2012, respectively. Management remains focused on limiting
exposures through actively monitoring these risks and maintaining a prudent
reinsurance program. In addition, the group has historically recognized
adverse development of the loss reserves associated with its asbestos and
environmental liabilities, although overall development of loss reserves has
been favorable in recent accident and calendar years. Given Chubb Group’s
leading market position, specialty niche underwriting focus, prudent balance
sheet liquidity, strong cash flows and excellent risk-adjusted capitalization,
A.M. Best considers it favorably positioned and sufficiently capitalized to
absorb these challenges and those posed by the continued competitive market.

Chubb Atlantic’s ratings recognize its solid risk-adjusted capitalization and
the implicit and explicit support provided by Chubb Corp. This financial
support is evidenced by the capital contributions Chubb Corp. has made in
recent years to support Chubb Atlantic’s operations, as well as the business
of Chubb Atlantic’s subsidiary, Chubb do Brasil Companhia de Seguros.
Furthermore, Chubb Atlantic is the beneficiary of sizable irrevocable letters
of credit issued by banks on behalf of Chubb Corp.

The ratings also acknowledge Chubb Atlantic’s strategic importance within the
Chubb Group, including its quota share reinsurance assumed from affiliates.

These positive rating factors are partially offset by the volatility in Chubb
Atlantic’s underwriting performance in prior years, largely due to adverse
loss reserve development.

Chubb Corp.’s debt-to-tangible capital ratio is maintained at a modest 20% as
of December 31, 2012. Despite the company’s ongoing share repurchase program,
liquid assets at the holding company are expected to be maintained at a level
more than sufficient to cover annual holding company expenses.

The FSR of A++ (Superior) and the ICRs of “aa+” have been affirmed for the
following property/casualty subsidiaries of The Chubb Corporation:

  *Federal Insurance Company
  *Chubb Custom Insurance Company
  *Chubb Indemnity Insurance Company
  *Chubb Insurance Company of Australia Limited
  *Chubb Insurance Company of Europe SE
  *Chubb Insurance Company of Canada
  *Chubb National Insurance Company
  *Executive Risk Indemnity Inc.
  *Executive Risk Specialty Insurance Company
  *Great Northern Insurance Company
  *Pacific Indemnity Company
  *Vigilant Insurance Company
  *Chubb Insurance Company of New Jersey
  *Chubb Lloyds Insurance Company of Texas
  *Northwestern Pacific Indemnity Company
  *Texas Pacific Indemnity Company
  *Chubb Atlantic Indemnity Ltd.

The following debt ratings have been affirmed

The Chubb Corporation—

-- “aa-” on $600 million 6.5% senior unsecured notes, due 2038

-- “aa-” on $600 million 5.75% senior unsecured notes, due 2018

-- “aa-” on $800 million 6.0% senior unsecured notes, due 2037

-- “aa-” on $275 million 5.2% senior unsecured notes, due 2013

-- “aa-” on $200 million 6.8% senior unsecured debentures, due 2031

-- “aa-” on $100 million 6.6% senior unsecured debentures, due 2018

-- “a” on $1 billion 6.375% junior subordinated debentures, due 2067

The following debt rating has been affirmed:

The Chubb Corporation—

-- AMB-1+ on commercial paper

The following indicative ratings have been affirmed for securities under the
shelf registration:

The Chubb Corporation—

-- “aa-” on senior unsecured debt

-- “a+” on subordinated debt

-- “a+” on preferred securities

-- “a” on preferred stock

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Key criteria utilized include: “Risk Management and the Rating
Process for Insurance Companies”; “Rating Natural Catastrophe Bonds”;
“Analyzing Commercial Paper Programs”; “Catastrophe Analysis in A.M. Best
Ratings”; “Insurance Holding Company and Debt Ratings”; “Equity Credit for
Hybrid Securities”; “The Treatment of Terrorism Risk in the Rating
Evaluation”; “Understanding BCAR for Property/Casualty Insurers”;
“Understanding BCAR for Canadian Property/Casualty Insurers”; “Understanding
Universal BCAR”; and “Rating Members of Insurance Groups.” Best’s Credit
Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more information,
visit www.ambest.com.

       Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contact:

A.M. Best Co.
Brian O’Larte, 908-439-2200, ext. 5138
Senior Financial Analyst
brian.o'larte@ambest.com
or
Jennifer Marshall, 908-439-2200, ext. 5327
Managing Senior Financial Analyst
jennifer.marshall@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com
 
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