A.M. Best Affirms FSR for Chubb

March 18, 2005

A.M. Best Co. has affirmed the financial strength rating of A++ (Superior) of the property/casualty subsidiaries of The Chubb Corporation.

Concurrently, A.M. Best has affirmed the existing senior debt ratings of “aa-” of Chubb and Chubb Executive Risk Inc., the “a+” of the capital securities of Executive Risk Capital Trust and the AMB-1+ on the commercial paper issued by Chubb Capital Corporation (all of Warren, NJ). Additionally, A.M. Best has affirmed the indicative ratings on securities, which are part of the shelf registration filed by Chubb. All ratings have a stable outlook.

The financial strength rating of each of Chubb’s member companies reflects their respective roles within the group and their contributions, which in collaboration, are viewed to be integral to Chubb’s overall worldwide business strategy. The rating is reflective of the group’s solid capitalization, substantially improved operating performance in 2003 and 2004, and favorable prospects for 2005.

The rating also considers Chubb’s well-recognized global franchise, strong market position and sustainable competitive advantages in its specialty insurance and upscale personal lines businesses. The rating also acknowledges the group’s proven financial flexibility, disciplined capital management and prudent loss reserving and pricing practices.

Partially offsetting these positive factors is Chubb’s exposure to potential future professional liability claims, susceptibility to catastrophes (including acts of terrorism), as well as the challenges associated with asbestos and environmental (A&E) liabilities. Chubb’s earnings prospects, albeit strong, are also likely to be tempered by the continuing relatively low interest rate environment and the eminent softening in the insurance market.

In addition, Chubb as well as other insurers and brokers have received subpoenas and other information requests in recent months from attorneys general in several states and regulators relating to certain business practices. Chubb said it intends to cooperate fully with the ongoing investigations.

On a consolidated basis, Chubb’s financial leverage currently approximates 22%, which, while down from 25% at year-end 2003, is relatively high for its current debt ratings. Notwithstanding, capital raising in recent years has increased the group’s liquidity–which along with improved earnings–has enhanced its coverage ratios.

Was this article valuable?

Here are more articles you may enjoy.