Chubb's Profits Contracted in 2008

Fourth quarter profits at Warren, New Jersey-based The Chubb Corp. fell 37 percent to $407 million from $650 million in the same quarter last year.

For the full year, net income was down 36 percent to $1.8 billion from $2.8 billion last year.
Net written premiums for the fourth quarter were down 4 percent to $2.9 billion - with about half the decline attributable to currency fluctuation. For the full year, net written premiums decreased 1 percent to $11.8 billion.

In 2008, premiums were down 3 percent in the U.S. and up 6 percent outside the U.S.

Chubb said its combined ratio in 2008 was 88.7 percent, compared with 82.9 percent in 2007. The impact of catastrophes accounted for 5.1 percentage points of the combined ratio in 2008 and 3 points in 2007.

The expense ratio was 30.2 percent in 2008 and 30.1 percent in 2007.

Property and casualty investment income after taxes for the fourth quarter was down 5 percent to $316 million, compared with $331 million in the fourth quarter of 2007, largely due to currency fluctuation and lower yields on short term investments.

"While net income was adversely affected by continued turmoil in capital markets, the relatively modest size of our investment losses reflects the successful execution of our conservative philosophy in managing our $39 billion portfolio," said John D. Finnegan, chairman, president and chief executive officer.

Breakdown by Lines

In 2008, Chubb Personal Insurance (CPI) net written premiums grew 3 percent to $3.8 billion. CPI's combined ratio was 87.1 percent in 2008 compared to 84.8 percent in 2007. The impact of catastrophes accounted for 5.4 percentage points of the combined ratio in 2008 and 6.3 points in 2007.

The Homeowners line grew 1 percent and had a combined ratio of 83.7 percent. Personal Automobile net written premiums declined 3 percent, and the combined ratio was 87.6 percent. Other Personal lines grew 17 percent and had a combined ratio of 97.5 percent.

Chubb Commercial Insurance (CCI) net written premiums declined 2 percent in 2008 to $5 billion. The combined ratio was 93.9 percent in 2008 and 85.8 percent in 2007. The impact of catastrophes accounted for 8.1 percentage points of the combined ratio in 2008 and 2.6 points in 2007. Average 2008 renewal rates in the U.S. were down 5 percent for CCI, which retained 85 percent of the U.S. premiums that came up for renewal. In the U.S., the ratio of new to lost business was 1 to 1.

Chubb Specialty Insurance (CSI) net written premiums declined 2 percent in 2008 to $2.9 billion. The combined ratio was 83.3 percent in 2008 and 77.4 percent in 2007.

Professional Liability had a 2 percent decrease in net written premiums and a combined ratio of 85 percent. In the U.S., average 2008 renewal rates for professional liability were down 2 percent, renewal premium retention was 88 percent and the ratio of new to lost business was 1.3 to 1.

Surety had a net written premium increase of 4 percent and a combined ratio of 69.9 percent.__

Obama Taps The Hartford's Wolin for Key Economic Policy Post

The Hartford Financial Services Group, Inc. today announced that Neal Wolin, president and chief operating officer of the company's Property and Casualty Operations, has accepted a position in the White House as Deputy Counsel to the President for Economic Policy and Deputy Assistant to the President.

Wolin joined The Hartford in 2001 as executive vice president and general counsel. He was promoted to president and chief operating officer of the company's Property and Casualty Operations in June 2007. Prior to joining The Hartford, he served in several positions in the U.S. Government, including General Counsel of the Department of the Treasury, Executive Assistant to the National Security Advisor and as Deputy Legal Adviser to the National Security Council. Wolin earned his J.D. from Yale Law School, his M.Sc. in Development Economics from the University of Oxford and his bachelor's degree from Yale University.

In conjunction with this announcement, The Hartford named two of its senior property and casualty executives, Juan Andrade and Jonathan Bennett, as interim co-leads of the Property and Casualty Operations. Andrade and Bennett will report to The Hartford's president and chief operating officer Tom Marra. A search for Wolin's successor is underway.

"Given the importance of the issues facing the country, there is no greater honor than being called to serve. I am looking forward to being part of the President's team of advisors in this most challenging period," said Wolin.

"President Obama is building an outstanding economic team to address the many complex challenges facing the nation and our financial system," said Ramani Ayer, chairman and chief executive officer. "We recognize the unique call to service this presents for Neal and wish him all the best in his return to Washington."

Andrade is currently executive vice president of sales and distribution for Property and Casualty. He joined The Hartford in 2006 when he assumed leadership of the P/C claims organization. Prior to joining The Hartford, Andrade held several leadership positions with The Progressive Corp., and also held management positions with American International Group.

Bennett is currently executive vice president of personal lines and small business insurance. Bennett joined The Hartford in 1999 as staff assistant to Ayer. He has since served in several leadership roles at the company, including vice president of corporate development, head of the eBusiness Ventures Team, and senior vice president of product management for the personal lines division. He was promoted to his current role in 2005. Before joining The Hartford, Bennett was with CIGNA, leading institutional fund strategy and marketing for the individual insurance division and as a product manager for corporate-owned life insurance. Prior to CIGNA, Bennett was with Arthur Andersen LLP.

Congressman Seeks National Review of State Workers' Compensation Laws

Congressman Joe Baca, D-Calif., has introduced legislation that would authorize the creation of a National Commission on State Workers' Compensation Laws.

Baca's National Commission on State Workers' Compensation Laws Act would establish a separate body to evaluate state workers' compensation laws in order to determine if they provide an "adequate, prompt and equitable" system for injured workers.

"More than 35 years have passed since our government took a serious look at the effectiveness of workers' compensation laws," said Rep. Baca. " Access to proper benefits and medical care after on the job injuries is a right every American worker deserves. I am hopeful this legislation will bring us closer to updating and modernizing our state workers' compensation laws to ensure they remain effective in this new century."

In 1972, a national commission authorized by the Nixon administration made numerous recommendations and set minimum standards.

Lawmakers Press Treasury Nominee to Boost Federal Oversight of Insurance

Seven U.S. lawmakers Friday urged Treasury Secretary nominee Timothy Geithner to boost federal oversight of insurance companies, a long-held goal of much -- although not all -- of the insurance industry.

Democratic Rep. Melissa Bean of Illinois, Republican Rep. Ed Royce of California and five others wrote to Geithner asking him "to either create an office within the Treasury Department or assign a high level Treasury appointee an insurance portfolio."

There are more than 6,000 insurers in the United States, but no federal regulator for them. Instead they answer to more than 50 state and territorial authorities. Some insurers like the regulatory system this way, while others don't.

With a new White House eyeing major regulatory reforms amid a crisis in the financial services sector, conditions look favorable for gains by the powerful faction within the industry that wants regulation centered in Washington, D.C.

The federal government has committed $150 billion in assistance to a bailout of American International Group Inc , once the world's largest insurer.

AIG nearly collapsed last year after becoming overexposed in the largely unregulated market for credit default swaps, which was undermined by the sharp U.S. housing downturn.

Bean and Royce are long-standing advocates of federal regulation, as are big insurers such as Allstate Corp.

"We all share the belief that we must take steps to ensure that a similar situation does not occur in the future," the lawmakers' letter said. They also cited last year's problems in the bond insurance industry as further evidence of the need for Washington to play a greater role in supervising insurers.

The American Insurance Association, a lobbying group for large property-casualty insurers, issued a statement of support for the lawmakers' letter.

Geithner on Friday pledged to strengthen regulation of over-the-counter derivatives, such as credit default swaps, and to pursue registration of hedge funds.

In written responses to questions from Sen. Carl Levin, a Michigan Democrat, Geithner said: "We are going to need sweeping changes, in regulatory policy, the oversight structure and in our tools for crisis management."

He faces a confirmation vote by the full Senate on Monday.

Insurer's Fire v. Pollution Argument Dismissed in Houston Court

Great American had previously asked a federal court in Houston to determine whether the total pollution exclusion of its excess policy applies to the claims asserted in the underlying lawsuits. This exclusion, like a similar exclusion in the policyholder's primary liability policy, excluded coverage for certain injuries arising out of "pollutants." Both policies defined "pollutant" to include "smoke," "soot" and "fumes."

The policyholder's primary policy, however, also contained what is commonly known as a "hostile fire" exception, which stated that its pollution exclusion does not apply to injuries arising out of "smoke" or "fumes" from a "hostile fire." The Great American policy did not contain this exception.

The agreement between Great American and its policyholder will result in the dismissal of Great American's federal court action.

Whether Great American's policyholder is liable to the plaintiffs will be determined in future proceedings in the lawsuits filed by the families of the individuals who died in the fire.

Great American's policyholder has consistently maintained that its conduct did not cause or contribute to the fire or its tragic consequences.