SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report February 6, 1997
(Date of earliest event reported)
__________
THE CHUBB CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey
(State of Incorporation)
1-8661 13-2595722
(Commission File (IRS Employer Identification No.)
incorporation)
15 Mountain View Road, P.O. Box 1615, Warren, New Jersey 07061-1615
(Address of principal executive offices)
Registrant's telephone number including area code:
(908) 903-2000
ITEM 5. OTHER EVENTS
On February 6, 1997, The Chubb Corporation (the "Registrant") issued the press
release attached as Exhibit 20.1 to this report and incorporated herein by
reference.
Any statements in this Report on Form 8-K or the exhibits hereto which may be
considered to be "forward looking statements" as that term is defined in
the Private Securities Litigation Reform Act of 1995 are subject to certain
risks and uncertainties. The factors which could cause actual results to
differ materially from those suggested by any such statements include but
are not limited to those discussed or identified from time to time in the
Corporation's public filings with the Securities & Exchange Commission and
specifically to: risks or uncertainties associated with the Corporation's
ongoing strategic evaluation of its non-property and casualty business, or
associated with its expectations of premium and investment income growth
projections and new cash available for investment; and, more generally, to:
general economic conditions including changes in interest rates and the
performance of the financial markets, changes in domestic and foreign laws,
regulations and taxes, changes in competition and pricing environments,
regional or general changes in asset valuations, the occurrence of
significant natural disasters, the inability to reinsure certain risks
economically, the adequacy of loss reserves, as well as general market
conditions, competition, pricing and restructurings.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
20.1 Registrant's press release, dated February 6, 1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
THE CHUBB CORPORATION
By: /s/ Robert Rusis
----------------------------
Name: Robert Rusis
Title: Senior Vice President
& General Counsel
Dated: February 7, 1997
EXHIBIT INDEX
Exhibit Description of Exhibit
20.1 Registrant's press release, dated February 6, 1997.
FOR IMMEDIATE RELEASE
Chubb Reports Record Operating Earnings for 1996
WARREN, N.J., February 6, 1997 - The Chubb Corporation today
announced record operating income for the fourth quarter and the year 1996,
despite higher catastrophe losses in both periods. Operating income in
1996 amounted to $634.5 million, up from $611.7 million in 1995. Net
income, which includes realized investment gains, was $694.7 million
compared with $696.6 million in 1995.
Fourth quarter operating income increased to $168.0 million from $156.7
million in 1995. Net income was $203.8 million for the quarter compared with
$193.5 million in 1995.
Chubb's fourth quarter and full year after-tax results are summarized
below:
Fourth Quarter Twelve Months
------------------ ---------------------
Millions of Dollars 1996 1995 1996 1995
- ------------------- ------ ------ ------ ------
Operating Income $168.0 $156.7 $634.5 $611.7
Realized Gains 35.8 36.8 60.2 84.9
------ ------ ------ ------
Net Income $203.8 $193.5 $694.7 $696.6
====== ====== ====== ======
Per Share
- ---------
Operating Income $ .95 $ .89 $3.58 $3.46
Realized Gains .20 .20 .33 .47
------ ------ ------ ------
Net Income $1.15 $1.09 $3.91 $3.93
====== ====== ====== ======
Effect of Catastrophe
Losses $ .12 $ .03 $ .51 $ .23
Note: Per share amounts have been retroactively adjusted
to reflect the two-for-one stock split effective
April 19, 1996.
"Producing a solid underwriting profit and record operating income
are impressive accomplishments, especially given the higher catastrophe
losses we experienced in 1996," said Dean R. O'Hare, chairman and chief
executive officer. "While overall premium growth in 1996 was somewhat
constrained by the competitive domestic commercial market, I am encouraged
that the rate of underlying growth increased during the second half of
1996. With continued strong international growth, I am optimistic as we
enter 1997."
Property and Casualty Results
Net premiums written in 1996 grew 10.9% to $4.8 billion. In the
fourth quarter, net premiums written increased 12.7% to $1.2 billion. For
the year, about one-third of the premium growth was due to changes in the
quota share reinsurance agreements with the Royal & Sun Alliance Insurance
Group plc. These changes resulted in Chubb retaining a greater portion of
its business written directly while assuming less reinsurance from Royal &
Sun Alliance. Changes in certain casualty reinsurance programs also
contributed to premium growth in 1996.
Mr. O'Hare noted that the complete unwinding of the exchange of
reinsurance between Chubb and Royal & Sun Alliance became effective January 1,
1997. He said, "The relationship with Sun Alliance, which dates back to
Chubb's origins in 1882, has been mutually rewarding and I am sure that, while
this business arrangement will cease, our friendship will continue for many
years."
Commenting on 1996 results Mr. O'Hare said, "Personal lines completed an
excellent year, with strong growth and a combined ratio of 91.7%. Commercial
lines produced growth and achieved a combined ratio of 99.7%, no small feat in
the current environment. Overseas, we continued to grow rapidly as the result
of both increasing levels of indigenous business in international markets and
the development of more global accounts for which we provide coverage in
multiple international locations."
Chubb's property and casualty business contributed $561.3 million to
operating income in 1996 compared with $562.9 million in 1995. Underwriting
income after taxes amounted to $17.1 million compared with $55.7 million in
1995 reflecting higher catastrophe losses in 1996. The combined loss and
expense ratio was 98.3% for the year compared with 96.8% in 1995. Catastrophe
losses were $141.7 million, which represented 3.1 percentage points of the
combined loss and expense ratio, compared with only $63.7 million or 1.5
percentage points in 1995.
Investment income after taxes increased 7.3% to $544.2 million in
1996 compared with $507.2 million in 1995.
For the fourth quarter of 1996, Chubb's property and casualty business
had income of $145.6 million compared with $144.4 million a year ago.
Underwriting income after taxes amounted to $4.9 million compared with $13.7
million in 1995. The combined loss and expense ratio was 98.4% for the fourth
quarter of 1996 compared with 97.6% in 1995. Catastrophe losses amounted to
$33.9 million, or 2.9 percentage points of the combined loss and expense
ratio, compared with $8.6 million or 0.8 of a percentage point in 1995.
Investment income after taxes was $140.7 million for the fourth quarter
of 1996 compared with $130.7 million in 1995, an increase of 7.6%.
Results of Other Businesses
Life and health insurance income after taxes amounted to $40.3
million for the year and $12.9 million for the fourth quarter of 1996
compared with $28.0 million and $6.2 million, respectively, in 1995.
Real estate income after taxes was $13.2 million in 1996 compared with
$6.0 million in 1995. For the fourth quarter of 1996, real estate income
amounted to $3.2 million compared with $2.5 million last year.
Chubb previously announced that it is in the process of evaluating its
strategic options with regard to its non-property and casualty businesses.
Mr. O'Hare said the evaluation indicates that a sale of the life insurance
business is likely to yield the greatest immediate value for Chubb
shareholders. Therefore, Chubb is currently exploring the sale of its life
insurance subsidiaries with a number of potential purchasers that have
indicated an interest in buying Chubb Life. Mr. O'Hare said the 1996
preliminary results do not reflect any financial impact of a potential sale
since the impact of any such sale is not yet known.
With respect to Chubb's real estate business, Mr. O'Hare said that the
Corporation is reviewing a number of alternatives. Chubb expects to receive
proposals from parties interested in purchasing a substantial portion of its
portfolio of office buildings and will consider its next steps in light of
these proposals.
Corporate
Shareholders' equity on December 31, 1996 amounted to $5.7 billion or
$32.38 per share up from $30.14 per share at the end of 1995.
Mr. O'Hare noted, "We continued to repurchase shares of our common stock
during the fourth quarter. A total of 1,700,000 shares were repurchased in
the open market in 1996."
These preliminary results are unaudited but include such adjustments as
management considers necessary for a fair presentation.
For further information contact: Gail E. Devlin Glenn A. Montgomery
(908) 903-3245 (908) 903-2365
THE CHUBB CORPORATION
PROPERTY AND CASUALTY PRODUCT MIX
TWELVE MONTHS ENDED DECEMBER 31
-------------------------------------------
Net Premiums Combined Loss and
Written Expense Ratios
1996 1995 1996 1995
-------- -------- -------- --------
(in millions)
Personal Insurance
Automobile $ 243.1 $ 200.3 86.5% 87.4%
Homeowners 546.1 455.6 104.3 93.8
Other 250.0 210.9 69.3 72.6
-------- -------- -------- --------
Total Personal 1,039.2 866.8 91.7 87.1
-------- -------- -------- --------
Commercial Insurance
Multiple Peril 671.0 575.7 118.1 110.0
Casualty 818.0 717.3 113.3 113.8
Workers' Compensation 243.7 223.4 101.8 95.1
Property and Marine 495.0 426.3 97.8 92.9
Executive Protection 775.7 647.0 76.5 82.1
Other 528.7 481.0 89.3 95.1
-------- -------- -------- --------
Total Commercial 3,532.1 3,070.7 99.7 99.3
-------- -------- -------- --------
Reinsurance Assumed 202.5 368.5 N/M 99.2
-------- -------- -------- --------
Total $4,773.8 $4,306.0 98.3% 96.8%
======== ======== ======== ========
QUARTER ENDED DECEMBER 31
-------------------------------------------
Net Premiums Combined Loss and
Written Expense Ratios
1996 1995 1996 1995
-------- -------- -------- --------
(in millions)
Personal Insurance
Automobile $ 58.2 $ 48.3 87.2% 88.0%
Homeowners 132.3 113.3 94.2 101.6
Other 57.9 50.5 74.8 70.4
-------- -------- -------- --------
Total Personal 248.4 212.1 88.0 90.9
-------- -------- -------- --------
Commercial Insurance
Multiple Peril 174.9 157.7 118.8 105.7
Casualty 197.7 168.9 117.8 115.9
Workers' Compensation 59.9 59.4 106.7 96.1
Property and Marine 117.1 93.4 105.0 103.0
Executive Protection 197.5 162.8 71.3 84.5
Other 121.7 103.0 92.5 87.2
-------- -------- -------- --------
Total Commercial 868.8 745.2 101.3 99.7
-------- -------- -------- --------
Reinsurance Assumed 67.2 93.3 100.5 96.0
-------- -------- -------- --------
Total $1,184.4 $1,050.6 98.4% 97.6%
======== ======== ======== ========
The property and casualty product mix for the twelve months and quarter
ended December 31, 1995 includes certain reclassifications to conform with
the 1996 presentation, which more closely reflects the way the property and
casualty business is now managed. The total net premiums written and
combined loss and expense ratio are not affected.
Effective January 1, 1996, the reinsurance agreements with the Royal & Sun
Alliance Insurance Group plc were changed. This resulted in Chubb
retaining a greater portion of its business written directly and assuming
less reinsurance from Royal & Sun Alliance.
