Exhibit 99.5
Modification of the Presentation of Losses
This report is for informational purposes only. It should be read in conjunction with documents filed by The Chubb Corporation with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
THE CHUBB CORPORATION
Beginning in the third quarter of 2008, the “net losses paid” and “increase (decrease) in outstanding losses” amounts in the property and casualty underwriting results reflect the impact of foreign currency fluctuations differently than in the past.
The property and casualty underwriting results that follow this page reflect modification to previously reported net losses paid and increase (decrease) in outstanding losses. Since net losses paid and increase (decrease) in outstanding losses for each line of business and in total have been modified by offsetting amounts, incurred losses for each line of business and in total are unchanged.
Definitions of Key Terms
Management evaluates underwriting results separately from investment results. The underwriting operations consist of four separate business units: personal insurance, commercial insurance, specialty insurance and reinsurance assumed. Performance of the business units is measured based on statutory underwriting results. Statutory accounting principles applicable to property and casualty insurance companies differ in certain respects from generally accepted accounting principles (GAAP). Under statutory accounting principles, policy acquisition and other underwriting expenses are recognized immediately, not at the time premiums are earned. Statutory underwriting income (loss) is arrived at by reducing premiums earned by losses and loss expenses incurred and statutory underwriting expenses incurred.
Management uses underwriting results determined in accordance with GAAP, among other measures, to assess the overall performance of the underwriting operations. To convert statutory underwriting results to a GAAP basis, policy acquisition expenses are deferred and amortized over the period in which the related premiums are earned. Underwriting income (loss) determined in accordance with GAAP is defined as premiums earned less losses and loss expenses incurred and GAAP underwriting expenses incurred.
Combined Loss and Expense Ratio or Combined Ratio
The combined loss and expense ratio, expressed as a percentage, is the key measure of underwriting profitability. Management uses the combined loss and expense ratio calculated in accordance with statutory accounting principles applicable to property and casualty insurance companies to evaluate the performance of the underwriting operations. It is the sum of the ratio of losses and loss expenses to premiums earned (loss ratio) plus the ratio of statutory underwriting expenses to premiums written (expense ratio) after reducing both premium amounts by dividends to policyholders.
THE CHUBB CORPORATION — WORLDWIDE PROPERTY AND CASUALTY UNDERWRITING RESULTS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2007 AND 2006 (DOLLARS IN MILLIONS) Personal Automobile Homeowners Personal Personal Net Premiums Written Increase (Decrease) in Unearned Premiums Net Premiums Earned Net Losses Paid Increase (Decrease) in Outstanding Losses Net Losses Incurred Expenses Incurred Dividends Incurred Statutory Underwriting Ratios After Dividends to Policyholders: Combined Premiums Written as a % THE CHUBB CORPORATION — WORLDWIDE PROPERTY AND CASUALTY UNDERWRITING RESULTS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2007 AND 2006 (DOLLARS IN MILLIONS) Commercial Commercial Commercial Commercial Workers’ Property Multiple Peril Casualty Compensation and Marine Commercial Net Premiums Written $1,252$1,290$1,726 $1,215$1,203$5,083 Increase (Decrease) in Unearned Premiums Net Premiums Earned 1,2921,735 1,2091,1485,120 Net Losses Paid 5582,401 Increase (Decrease) in Outstanding Losses Net Losses Incurred 5531,151 4672,822 Expenses Incurred 480201197 3831,5441,486 Dividends Incurred Statutory Underwriting $ 249$ 313$ $ 188$ 298$ 738 Ratios After Dividends to Policyholders: 42.8%66.4% 49.1%40.7%55.3% 33.028.2 35.231.830.5 Combined 75.8%94.6% 84.3%72.5%85.8% Premiums Written as a % of Total 10.8%14.5% 10.2%10.0%42.8% THE CHUBB CORPORATION — WORLDWIDE PROPERTY AND CASUALTY UNDERWRITING RESULTS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2007 AND 2006 (DOLLARS IN MILLIONS) Professional Liability Specialty Net Premiums Written Increase (Decrease) in Unearned Premiums Net Premiums Earned Net Losses Paid Increase (Decrease) in Outstanding Net Losses Incurred Expenses Incurred Dividends Incurred Statutory Underwriting Income Ratios After Dividends to Policyholders: Combined Premiums Written as a % of Total THE CHUBB CORPORATION — WORLDWIDE PROPERTY AND CASUALTY UNDERWRITING RESULTS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2007 AND 2006 (DOLLARS IN MILLIONS) Reinsurance Worldwide Insurance Net Premiums Written Increase (Decrease) in Unearned Premiums Net Premiums Earned Net Losses Paid Increase (Decrease) in Outstanding Net Losses Incurred Expenses Incurred Dividends Incurred Statutory Underwriting Income Increase in Deferred Acquisition GAAP Underwriting Income Ratios After Dividends to Policyholders: Combined Premiums Written as a % of Total
* Combined, loss and expense ratios are no longer presented for Reinsurance Assumed since this business is in run-off. THE CHUBB CORPORATION — WORLDWIDE PROPERTY AND CASUALTY UNDERWRITING RESULTS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2007 AND 2006 (DOLLARS IN MILLIONS) Worldwide United States United States Net Premiums Written Increase (Decrease) in Unearned Premiums Net Premiums Earned Net Losses Paid Increase (Decrease) in Outstanding Net Losses Incurred Expenses Incurred Dividends Incurred Statutory Underwriting Income Increase in Deferred Acquisition GAAP Underwriting Income Ratios After Dividends to Policyholders: Combined Premiums Written as a % of Total
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Exhibit 99.5