A.M. Best Co. has affirmed the financial strength rating (FSR) of A++ (Superior) and issuer credit ratings (ICR) of “aa+” of the Chubb Group of Insurance Companies (Chubb Group) and its property/casualty members. Concurrently, A.M. Best has affirmed the ICR of “aa-”, senior debt ratings, junior subordinated debt, indicative ratings on securities and the AMB-1+ on the commercial paper of Chubb Group’s publicly traded holding company, The Chubb Corporation (Chubb Corp) [NYSE: CB].

In addition, A.M. Best has affirmed the FSR of A++ (Superior) and ICR of “aa+” of Chubb Atlantic Indemnity Ltd. (Chubb Atlantic) (Pembroke, Bermuda). The outlook for all ratings is stable, except for the commercial paper, which does not have an outlook. All companies are domiciled in Warren, NJ, except where specified. (See below for a detailed list of the companies and ratings.)

The ratings reflect Chubb Group’s superior risk-adjusted capitalization, excellent underwriting and overall operating performance and the sustainable competitive advantages within its specialty and upscale personal insurance businesses. The ratings also recognize Chubb Group’s comprehensive and proactive enterprise risk management, disciplined underwriting, strong franchise recognition and access to the capital markets through Chubb Corp.

These rating factors are partially offset by Chubb Group’s historical adverse loss reserve development associated with its asbestos and environmental liabilities. Additionally, catastrophe losses have modestly impacted underwriting performance in recent years; however, management remains focused on limiting exposures through actively monitoring these risks and maintaining a prudent reinsurance program. Given Chubb Group’s leading market position, specialty niche underwriting focus, prudent balance sheet liquidity, strong operating cash flows and excellent risk-adjusted capitalization, A.M. Best considers the group favorably positioned and sufficiently capitalized to absorb these challenges and those posed by the continued competitive market.

Chubb Atlantic’s ratings recognize its strong risk-adjusted capitalization and the implicit and explicit support provided by Chubb Corp. This financial support is evidenced by the capital contributions Chubb Corp. has made in recent years to support Chubb Atlantic’s operations, as well as the business of Chubb Atlantic’s subsidiary, Chubb do Brasil Companhia de Seguros. Furthermore, Chubb Atlantic is the beneficiary of sizable irrevocable letters of credit issued by banks on behalf of Chubb Corp.

The ratings also acknowledge Chubb Atlantic’s strategic importance within the Chubb Group, including its quota share reinsurance assumed from affiliates.

These positive rating factors are partially offset by Chubb Atlantic’s volatility in underwriting performance in prior years, largely due to adverse loss reserve development.

Chubb Corp.’s debt-to-total-capital ratio is maintained at a modest 21% as of December 31, 2010. Despite the company’s ongoing share repurchase program, liquid assets at the holding company are expected to be maintained at a level more than sufficient to cover annual holding company expenses.

The FSR of A++ (Superior) and ICRs of “aa+” have been affirmed for the Chubb Group of Insurance Companies and its following property/casualty members:
  • Federal Insurance Company
  • Chubb Custom Insurance Company
  • Chubb Indemnity Insurance Company
  • Chubb Insurance Company of Australia Limited
  • Chubb Insurance Company of Europe SE
  • Chubb Insurance Company of Canada
  • Chubb National Insurance Company
  • Executive Risk Indemnity Inc.
  • Executive Risk Specialty Insurance Company
  • Great Northern Insurance Company
  • Pacific Indemnity Company
  • Vigilant Insurance Company
  • Chubb Insurance Company of New Jersey
  • Chubb Lloyds Insurance Company of Texas
  • Northwestern Pacific Indemnity Company
  • Texas Pacific Indemnity Company

The following debt ratings have been affirmed:

The Chubb Corporation— --“aa-” on $600 million 6.5% senior unsecured notes, due 2038 --“aa-” on $600 million 5.75% senior unsecured notes, due 2018 --“aa-” on $800 million 6.0% senior unsecured notes, due 2037 --“aa-” on $275 million 5.2% senior unsecured notes, due 2013 --“aa-” on $400 million 6.0% senior unsecured notes, due 2011 --“aa-” on $200 million 6.8% senior unsecured debentures, due 2031 --“aa-” on $100 million 6.6% senior unsecured debentures, due 2018 --“a” on $1 billion 6.375% junior subordinated debentures, due 2067

The Chubb Corporation—AMB-1+ on commercial paper

The following indicative ratings have been affirmed for securities under the shelf registration:

The Chubb Corporation— --“a+” on preferred securities --“a” on preferred stock --“a+” on subordinated debt --“aa-” on senior unsecured debt

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition , which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “ Rating Members of Insurance Groups”; “Natural Catastrophe Stress Test Methodology”; “Risk Management and the Rating Process for Insurance Companies”; and “A.M. Best’s Ratings & the Treatment of Debt.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2011 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Copyright Business Wire 2010

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