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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 11-K
ANNUAL REPORT
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[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
COMMISSION FILE NUMBER 1-8661
A. FULL TITLE OF THE PLAN: CAPITAL ACCUMULATION PLAN OF THE CHUBB
CORPORATION, CHUBB & SON INC. AND PARTICIPATING AFFILIATES.
B. NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE PLAN AND THE
ADDRESS OF ITS PRINCIPAL EXECUTIVE OFFICE:
The Chubb Corporation (the "Corporation")
15 Mountain View Road
P.O. Box 1615
Warren, New Jersey 07061 - 1615
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CAPITAL ACCUMULATION PLAN OF
THE CHUBB CORPORATION, CHUBB & SON INC.
AND PARTICIPATING AFFILIATES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
DEC. 31, 1999 DEC. 31, 1998
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<S> <C> <C>
Beneficial interest in The Chubb Corporation
Master Trust (Notes 1 and 3).............................. $683,184,764 $601,499,748
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Net Assets Available for Benefits...................... $683,184,764 $601,499,748
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</TABLE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
Contributions
Employees:
Participants........................................... $ 847,045
Pay conversion......................................... 24,919,743
Rollovers and transfers from other plans............... 5,260,241
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Total employees................................... 31,027,029
Employer Match............................................ 14,631,797
Net increase (decrease) resulting from investment in The
Chubb Corporation Master Trust (Note 3)................... 73,542,442
Distributions to participants............................... (37,260,614)
Forfeitures................................................. (255,638)
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Increase in net assets available for benefits............... 81,685,016
Net assets available for benefits at December 31, 1998...... 601,499,748
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Net assets available for benefits at December 31, 1999...... $683,184,764
============
</TABLE>
See accompanying notes.
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CAPITAL ACCUMULATION PLAN OF
THE CHUBB CORPORATION, CHUBB & SON INC.
AND PARTICIPATING AFFILIATES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment valuation
The Plan's assets at December 31, 1999 are held by The Chubb Corporation
Master Trust ("Master Trust") along with the assets of the Corporation's
Employee Stock Ownership Plan.
The Trust Fund's assets are valued as follows:
- The Plan's investment in the Master Trust is stated at fair value,
which is the redemption price of the Master Trust's Investments.
- Marketable equity and debt securities traded on a national securities
exchange are valued at the last reported sale price on the last
business day of the year. Such securities traded in the over-the-
counter market are valued at the closing bid price on the last
business day of the calendar year.
- Interests in commingled trust funds, mutual funds and pooled
investment funds are valued at the redemption price established by the
trustee or the investment manager of the respective fund.
- Participants' notes are valued at the unpaid principal balances, with
maturities ranging from one to ten years. Notes executed during the
period September 30, 1989 through March 20, 1994 bear interest at a
rate which is equal to the prime rate charged by Citibank, N.A. as of
the applicable valuation date next preceding the valuation date on
which the loan is made, rounded up to the next whole integer, except
that the rate shall not exceed the maximum rate permitted by
applicable law. Notes executed after March 20, 1994 bear interest at a
rate which is equal to the prime rate as reported in the Wall Street
Journal on the last business day of the month next preceding the
valuation date on which the loan is made, rounded up to the next whole
integer, except that the rate shall not exceed the maximum rate
permitted by applicable law.
- The Fixed Income Fund is invested substantially or wholly in contracts
with one or more banks, insurance companies or other financial
institutions under which the Fund receives a specified rate of
interest, fixed income securities related to such contracts,
securities issued or guaranteed by the United States government or any
instrumentality or agency thereof, and other short term instruments
designed to provide the Fund with adequate liquidity. The investment
contracts are fully benefit responsive and are valued at contract
value, which approximates fair value therefore, no valuation reserve
is required. Contract value represents contributions to the fund plus
interest accrued less redemptions. The crediting interest rates for
calendar years 1999 and 1998 ranged from 7.35% to 5.23%. Generally,
crediting interest rates reset quarterly or annually. However, some
rates extend through the maturity date of the contract. The average
yield for the calendar years 1999 and 1998 were 6.51% and 6.65%,
respectively. These contracts are subject to certain restrictions or
penalties in the event of early withdrawal or liquidation.
Security transactions
Purchases and sales of securities are recorded on trade dates. Gains or
losses on the sale of securities are based on average cost.
Dividend income is recorded on the ex-dividend date. Interest income is
recorded on an accrual basis.
Administrative and investment management expenses
All expenses related to the administration of the Plan and all fees paid to
the trustee and other investment managers for the management of the Plan's
investments, except for brokerage commissions and transfer taxes are expected,
but not required to be paid by The Chubb Corporation, Chubb & Son Inc. and
Participating
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CAPITAL ACCUMULATION PLAN OF
THE CHUBB CORPORATION, CHUBB & SON INC.
AND PARTICIPATING AFFILIATES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999 AND 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Affiliates (the "Employers" or "Plan Sponsors"). The Plan Administrator, the
Profit Sharing Committee, is authorized to charge Participants account
maintenance fees.
In 1999 and 1998, virtually all expenses were paid by the employers on
behalf of the Plan.
Income tax status
The Internal Revenue Service ("IRS") has determined and informed the
Company by letter dated December 22, 1995 that the Plan qualifies under Section
401(a) of the Internal Revenue Code ("IRC"), and therefore the trust established
under the Plan is tax-exempt. The Plan has been amended since receiving the
determination letter. The Plan administrator and its counsel believe that the
Plan is currently designed and being operated in compliance with applicable
requirements of the IRC. The Plan Administrator has indicated that it will take
the necessary steps, if any, to maintain the Plan's qualified status.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Statement of Position 99-3
During 1999, the Plan adopted Statement of Position 99-3, Accounting for
and Reporting of Certain Defined Contribution Plan Investments and Other
Disclosure Matters. Accordingly, certain prior year amounts have been
reclassified to conform to the 1999 presentation.
2. PLAN DESCRIPTION
The following is an overall description of the Plan. More detailed
information may be obtained in the Plan document which is maintained by the Plan
Administrator.
The Plan is a defined contribution plan. Generally, each employee is
eligible to participate in the Plan either upon the completion of one year of
service and the attainment of age 21 or the completion of two years of service.
Under the Plan, a participant may elect to have part of his or her salary
otherwise due from the Employer contributed to the Plan by such Employer on a
pre-tax basis (the employer pay conversion contribution) or after tax basis
(participant contribution). The Plan is funded on a semi-monthly basis. Pre-tax
contributions are subject to an annual limitation of $10,000 in 1999, which may
be increased annually based on the Consumer Price Index. A participant's pre-tax
pay conversion contributions are matched dollar for dollar up to the first 4% of
compensation (the employer matching contribution). In addition, employees may
make rollover contributions from other qualified plans.
The Plan allows each participant the option of investing his or her own
contribution and his or her share of the employer's matching contribution in
several investment funds. Effective June 1, 1999, one additional fund, the
Fidelity Fund was added to the Plan. Effective June 1, 1999, the Vanguard Value
Index Fund was added, replacing the Strong Schafer Value Fund as the Plan's
Value Equity option. Participants may, subject to limitations, transfer their
investments between funds at their own request. Generally, the investments of
the individual funds are managed by several outside investment managers, subject
to the Plan's guidelines.
A separate account is maintained for each participant. Each participant
employed prior to December 31, 1992 has a 100% vested nonforfeitable interest in
all units credited to his or her account. A participant hired after December 31,
1992 is required to complete five years of service in order to have a 100%
vested nonforfeitable interest in units credited to his or her account
attributable to the employer matching
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CAPITAL ACCUMULATION PLAN OF
THE CHUBB CORPORATION, CHUBB & SON INC.
AND PARTICIPATING AFFILIATES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999 AND 1998
2. PLAN DESCRIPTION -- (CONTINUED)
contribution and earnings on the employer matching contribution. Service with
affiliated non-participating companies is considered in calculating vesting and
participation service. Forfeited balances of terminated participants' nonvested
accounts are used to reduce future company contributions or pay plan expenses.
A participant may withdraw any amount which does not exceed the aggregate
current value of his or her own participant contributions, subject to certain
limitations. In the event of financial hardship, there are provisions, subject
to limitations and penalties, which will permit an active participant to
withdraw certain other amounts from his or her account. All withdrawals must be
in cash.
Participants may obtain loans from the Plan pursuant to the provisions
specified in the Plan. Loans are payable in equal installments representing a
combination of interest and principal by withholding from the participant's
semi-monthly paychecks, and the outstanding principal amounts of any loans can
be prepaid on any applicable valuation date. In the event a participant has a
loan outstanding under the Plan, various limitations exist on such participant's
rights to receive further loans under the Plan.
Upon retirement, the balance in a participant's account is payable to him
or her in a lump sum or in installments over 5, 10 or 15 years or over a period
equal to his or her life expectancy or to the joint life expectancies of the
participant and his or her spousal beneficiary. In addition to these options, a
participant may elect to defer the lump sum payment or the commencement of
installments until the day following any applicable valuation date, then elected
by him or her, which is not later than the April 1 of the calendar year
following the calendar year in which the participant attains age 70 1/2. In the
event of termination of employment other than by reason of retirement,
disability or death, a participant will receive the balance in his or her
separate account in a lump sum payment. However, if the value in the
participant's account is greater than a certain limit, the participant may
choose either to receive the lump sum distribution or to leave the units
invested in the Plan until age 65, disability or death. If a participant dies,
before or after retirement or after termination, any remaining balance in his or
her account is paid to his or her estate or beneficiary under any of the
following payment options: (a) lump sum, (b) installments as received by the
participant prior to death, or (c) installment payments in accordance with the
Plan, regardless of method received by participant prior to death.
Upon request, any lump sum distribution to a participant or his or her
beneficiary from The Chubb Corporation Stock Fund may be made in common stock of
The Chubb Corporation in lieu of cash payments.
While the Employers have not expressed any intent to terminate the Plan,
they are free to do so at any time subject to the provisions of ERISA. In the
event of such a termination, each affected participant is entitled to receive
the value of his or her account.
3. INVESTMENTS
The Trust Fund is managed by Fidelity Management Trust Company (the
"Trustee"). The Trustee and certain investment managers have full discretionary
authority for the purchase and sale of investments subject to certain
limitations on the composition of the portfolio as specified in the master trust
agreement.
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CAPITAL ACCUMULATION PLAN OF
THE CHUBB CORPORATION, CHUBB & SON INC.
AND PARTICIPATING AFFILIATES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999 AND 1998
3. INVESTMENTS -- (CONTINUED)
The Plan's investments are in the Master Trust which was established for
the investment of assets of the Plan and the Corporation's Employee Stock
Ownership Plan. Each participating plan has an undivided interest in the Master
Trust. At December 31, 1999 and 1998, the Plan's interest in the net assets of
The Chubb Corporation Master Trust was approximately 67% and 60% respectively.
Investment income and expenses are allocated to the Plan based upon its pro rata
share in the net assets of the Master Trust.
The following table presents the fair value of investments for the Master
Trust at December 31, 1999 and 1998. Investments that represent 5% or more of
the Master Trust investments as of December 31, 1999 and 1998 are separately
identified.
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
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<S> <C> <C>
INVESTMENTS, AT FAIR VALUE:
Fixed Income Securities
Investments in Insurance and Bank Contracts.............. $ 170,637,022 $ 166,001,126
The Chubb Corporation Common Stock......................... $ 429,837,560 $ 511,079,736
Mutual Funds
Spartan U.S. Equity Index Fund........................... $ 161,177,380 $ 132,423,032
Fidelity Contrafund Fund................................. 84,913,784 62,353,720
Other.................................................... 145,283,733 104,173,030
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Subtotal......................................... $ 391,374,897 $ 298,949,782
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Money Market Funds......................................... $ 12,986,118 $ 9,543,667
Participant Loans.......................................... 19,960,892 19,441,401
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TOTAL............................................ $1,024,796,489 $1,005,015,712
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</TABLE>
Investment income for the Master Trust is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
----------------------------
<S> <C>
Net Appreciation (depreciation) in fair value of investments
determined by quoted market price:
The Chubb Corporation Common Stock.......................... $(63,245,432)
Mutual Funds................................................ 48,637,796
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Subtotal.......................................... $(14,607,636)
Interest and Dividend Income................................ 43,423,075
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$ 28,815,439
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</TABLE>
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CAPITAL ACCUMULATION PLAN OF
THE CHUBB CORPORATION, CHUBB & SON INC.
AND PARTICIPATING AFFILIATES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999 AND 1998
4. UNITS OF PARTICIPATION AND VALUES
The interest of an employee in the investment chosen is represented by
units of participation. Effective July 1, 1997, investment values are reported
in shares rather than units, in order for participants to more easily track fund
performance.
5. FUND BALANCES DUE PARTICIPANTS
Amounts allocated to accounts of Participants who have withdrawn from
participation in the Plan at December 31, 1998 were $2,309.
For the purpose of preparing the Plan's Form 5500, the Department of Labor
Rules and Regulations require that these amounts be reported as liabilities.
Distributions to Participants on Form 5500 also differ for this reason.
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REPORT OF INDEPENDENT AUDITORS
The Profit Sharing Committee
Capital Accumulation Plan of The Chubb Corporation,
Chubb & Son Inc. and Participating Affiliates
We have audited the accompanying statements of Net Assets Available for
Plan Benefits of the Capital Accumulation Plan of The Chubb Corporation, Chubb &
Son Inc. and Participating Affiliates as of December 31, 1999 and 1998, and the
related Statement of Changes in Net Assets Available for Plan Benefits for the
year ended December 31, 1999. These financial statements are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the Net Assets Available for Plan Benefits of the
Capital Accumulation Plan of The Chubb Corporation, Chubb & Son Inc. and
Participating Affiliates at December 31, 1999 and 1998 and the Changes in its
Net Assets Available for Plan Benefits for the year ended December 31, 1999, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
June 23, 2000
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CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8: No. 33-12208, No. 33-29185, No. 33-30020, No. 33-49230 and No.
33-49232) pertaining to the Capital Accumulation Plan of The Chubb Corporation,
Chubb & Son Inc. and Participating Affiliates and in the related Prospectuses of
our report dated June 23, 2000 with respect to the financial statements of the
Capital Accumulation Plan of The Chubb Corporation, Chubb & Son Inc. and
Participating Affiliates included in this Annual Report (Form 11-K) for the year
ended December 31, 1999.
ERNST & YOUNG LLP
New York, New York
June 23, 2000
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
PROFIT SHARING COMMITTEE OF THE CAPITAL ACCUMULATION PLAN OF THE CHUBB
CORPORATION, CHUBB & SON INC. AND PARTICIPATING AFFILIATES HAS DULY CAUSED THIS
ANNUAL REPORT TO BE SIGNED BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
CAPITAL ACCUMULATION PLAN OF
THE CHUBB CORPORATION, CHUBB & SON INC. and
PARTICIPATING AFFILIATES
By: DONALD B. LAWSON
DONALD B. LAWSON, A MEMBER OF THE
PROFIT SHARING COMMITTEE
Dated: June 23, 2000
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