Chubb Reports ‘Strong’ Second Quarter

July 28, 2004

The Chubb Corporation of Warren, N.J. (NYSE: CB) reported that net income in the second quarter of 2004 was $356.1 million, a 41 percent increase over net income of $252.1 million in the secondquarter of 2003. Net income per share increased 28 percent to $1.85 from $1.45.

Operating income increased 43 percent in the second quarter
of 2004 to a record $341.0 million.

“We are delighted with our continued strong financial performance,” said John D. Finnegan, chairman, president and chief executive officer. “Operating income per share was the highest of any quarter in Chubb’s history, reflecting strong premium growth, favorable loss experience and successful expense control initiatives. These results — following record first quarter results — validate our focus on executing our core property and casualty strategy of maintaining underwriting discipline, growing the business profitably by leveraging strong producer relationships, and reducing our expense structure.”

According to the insurer, highlights of the second quarter include:

* Record operating income and operating income per share for the second quarter and the first six months;

* Double-digit net written premium growth of 12 percent to $2.9 billion;

* A combined ratio of 92.8 percent, compared to 95.3 percent in the second quarter of

* A net reserve increase of $160 million in Chubb’s Financial Institutions segment for Errors & Omissions (E&O) losses related to investment banks, and an $80 million release of net reserves for losses from the September 11, 2001 attack;

* An expense ratio that improved to 29.5 percent from 30.7 percent a year ago;

* An agreement reached after the close of the quarter which effectively eliminates a $500 million exposure from surety bonds issued for Aquila; and

* A $4 billion reduction of notional exposure from Chubb Financial
Solutions (CFS) credit default swaps at no cost, bringing remaining
notional exposure to credit default swaps to $11.4 billion.

Property and casualty net premiums written in the second quarter of 2004 grew 12 percent both in the U.S. and outside the U.S.
Catastrophe losses for the 2004 second quarter (excluding the reserve release related to the September 11th attack) were $45.7 million, accounting for 1.6 percentage points of the combined ratio. In the second quarter of 2003, catastrophe losses were $70.6 million, representing 2.8 percentage points of the combined ratio.

For the first six months of 2004, net income was a record $716.8 million or $3.73 per share, compared with $476.7 million or $2.76 per share for the first half of 2003. Operating income totaled a record $649.1 million or $3.38 per share for the first half of 2004, compared with $460.3 million or $2.66 per share for the first half of 2003. Results for the first six months of 2004 include an after-tax loss of $11 million or $0.06 per share from CFS, compared with after-tax income of $5 million or $0.03 per share in the first half of 2003.

“In light of first half operating earnings of $3.44 per share excluding
CFS and our expectation of continued strong performance, we are raising guidance for full-year 2004 operating earnings per share to a range of $6.80 to $7.20,” said Finnegan. The company’s previous guidance, provided on February 3, 2004, was $5.90 to $6.30 per share.

Finnegan said the revised operating income guidance assumes:

* A combined ratio between 92 percent and 94 percent for the year

* Growth of property and casualty investment income after taxes of 9 percent to 11 percent.

Finnegan said he expects 2004 net written premium growth for the full
year to be at the low end of the previous guidance of 10 percent to 14 percent.

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