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

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating (FSR) of A++ (Superior) and issuer credit ratings (ICR) of “aa+” of the Chubb Group of Insurance Companies (Chubb Group) and its property/casualty members. Concurrently, A.M. Best has affirmed the ICR of “aa-”, senior debt ratings, junior subordinated debt, indicative ratings on securities and the AMB-1+ on the commercial paper of Chubb Group’s publicly traded holding company, The Chubb Corporation (Chubb Corp) [NYSE: CB].

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 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. The ratings also recognize Chubb Group’s comprehensive and proactive enterprise risk management, disciplined underwriting, 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 the group’s balance sheet is derived from its consistent generation of underwriting profits (although recent years have been impacted by 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 operating cash flows.

These positive rating factors are partially offset by Chubb Group’s challenging market conditions and catastrophe and weather-related losses, which have impacted underwriting performance in the most recent years. 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. Given Chubb Group’s leading market position, specialty niche underwriting focus, prudent balance sheet liquidity, strong operating 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 Chubb Atlantic’s volatility in 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, 2011. 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 ICRs of “aa+” have been affirmed for the Chubb Group of Insurance Companies and its following property/casualty members:

• 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

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 Members of Insurance Groups”; “’ Insurance Holding Company and Debt Ratings”; “Catastrophe Analysis in A.M. Best Ratings”; “Evaluating Non-Insurance Ultimate Parents”; “The Treatment of Terrorism Risk in the Rating Evaluation”; and “Equity Credit for Hybrid Securities.” 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, visitwww.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best Co.
Brian O’Larte, 908-439-2200, ext. 5138
Senior Financial Analyst
[email protected]
orJennifer Marshall, 908-439-2200, ext. 5327
Managing Senior Financial Analyst
[email protected]
orRachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
[email protected]
orJim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Co.