10-KPeriod: FY2008

Chubb Ltd Annual Report, Year Ended Dec 31, 2008

Filed February 27, 2009For Securities:CB

Summary

Chubb Ltd. (ACE Limited at the time of this filing) presented its 2008 annual report highlighting a year marked by significant strategic moves, including its redomestication to Zurich, Switzerland, and the substantial acquisition of Combined Insurance Company of America for $2.56 billion. This acquisition significantly bolstered its Accident & Health (A&H) franchise and distribution capabilities. The company navigated a challenging economic environment, characterized by market volatility and a recession, which impacted investment performance and business exposures. Despite these headwinds, Chubb emphasized its strong capital position and global diversification as key strengths, allowing it to capitalize on market opportunities and maintain a focus on disciplined underwriting. The report also detailed the company's ongoing efforts in managing complex liabilities such as asbestos and environmental claims, alongside robust risk management strategies and a focus on maintaining strong financial strength ratings.

Financial Highlights

33 data points
Beta

Revenue

$13.63B

Net Income

$1.20B

8.8% Net Margin

EPS (Diluted)

$3.50

Total Assets

$72.06B

Cash & Equivalents

$867.00M

Free Cash Flow

$4.10B

Financial Statements
Beta
Revenue$13.63B
Interest Expense$230.00M
Net Income$1.20B
EPS (Basic)$3.52
EPS (Diluted)$3.50
Shares Outstanding (Basic)332.90M
Shares Outstanding (Diluted)334.61M

Key Highlights

  • 1Redomestication to Zurich, Switzerland, completed in July 2008, shifting legal jurisdiction and governance.
  • 2Acquisition of Combined Insurance Company of America for $2.56 billion on April 1, 2008, significantly expanding the Accident & Health (A&H) business.
  • 3Net income of $1.197 billion for 2008, down from $2.578 billion in 2007, largely due to significant net realized investment losses of $1.633 billion.
  • 4Total assets stood at $72.06 billion and shareholders' equity at $14.45 billion as of December 31, 2008.
  • 5Net premiums earned increased by 7% to $13.20 billion, driven by the Combined Insurance acquisition and growth in A&H business, despite a decline in casualty lines.
  • 6Combined ratio improved slightly to 89.6% in 2008 from 87.9% in 2007, though this was influenced by significant catastrophe losses ($567 million pre-tax).
  • 7The company actively managed its capital, including the redemption of all outstanding Preferred Shares for $575 million in June 2008.

Frequently Asked Questions

The acquisition of Combined Insurance for $2.56 billion on April 1, 2008, significantly boosted Chubb's Accident & Health (A&H) business and distribution channels. It added $1.1 billion to net premiums written in 2008. The consolidated financial statements include Combined Insurance's results from April 1, 2008 onwards. The acquisition generated $883 million in goodwill and $45 million in other intangible assets.

The company experienced significant net realized investment losses of $1.633 billion in 2008, a substantial increase from $61 million in 2007. This was primarily due to declines in the value of its fixed income and equity portfolios, exacerbated by widening credit spreads and market volatility. Other-than-temporary impairments on investments totaled $1.1 billion for fixed maturities and $248 million for equity securities in 2008.

Key risk factors highlighted include the severe impact of the ongoing recession and global financial downturn on the business, liquidity, and financial condition. The company also faces significant exposure to natural and man-made disasters, the uncertainty of claims exceeding loss reserves, and the emergence of new claim and coverage issues. The failure of loss limitation methods, potential reinsurance counterparty defaults, and the impact of operational system failures are also noted risks.

Chubb completed its redomestication from the Cayman Islands to Zurich, Switzerland, in July 2008. This move subjects the company to Swiss law and governance. While continuing to use U.S. dollars as its reporting currency, the par value of its shares changed to Swiss francs. The company also intends to pay dividends as a reduction in par value or paid-in capital to potentially avoid Swiss withholding tax.