A.M. Best Affirms A++ Rating of Chubb.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--June 9, 2000

A.M. Best Co. has affirmed the A++ (Superior) financial strength ratings of the property/casualty subsidiaries of The Chubb Corporation, Warren, N.J.

The three members of the former Executive Risk Group, acquired on July 19, 1999, have been upgraded from A (Excellent) to A++ as a result of their pool membership.

The ratings apply to Chubb's ten pool members and four reinsured affiliates. The pool, led by Federal Insurance Co., was recently expanded to include the former Executive Risk Group. The rating also applies to four international affiliates, which A.M. Best considers to be core subsidiaries as they are integral to Chubb's overall business strategy. The rating recognizes the centralized underwriting control and capital support afforded by Chubb to its subsidiaries, which operate as a cohesive unit in terms of underwriting capacity and capabilities.

The rating reflects the Chubb group of companies' outstanding operating performance, excellent capitalization, conservative operating strategies, strong franchise and sustainable competitive advantages within its specialty commercial and upscale personal lines businesses. These positive rating factors are derived from Chubb's long-standing producer relationships, well-recognized global franchise, highly focused business strategies and strong customer loyalty stemming from tailored and value-added insurance programs. In addition, the rating acknowledges Chubb's consistently favorable loss ratios, sophisticated loss control expertise, disciplined underwriting and adherence to sound operating fundamentals, which includes a commitment to adequate loss reserving and pricing practices. The group also benefits from its tighter focus on core property/casualty operations. This focus is the result of Chubb's 1997 divestiture of its life insurance unit and a substantial amount of commercial real estate properties, as well as the recent acquisition of Executive Risk Group that significantly increased its presence in the executive protection and professional liability insurance market.

Somewhat offsetting these positive rating factors are the highly competitive commercial and personal lines market conditions within the property/casualty industry. These conditions have led to large underwriting losses in Chubb's standard commercial lines and reduced underwriting profitability in other core business segments. Chubb is aggressively raising premium rates and pruning its standard commercial lines unit; however, competitive market conditions within the personal and specialty commercial lines segments will continue to challenge the group's resiliency and near term profitability.

The group's underwriting leverage remains higher than that of its comparably rated peers, despite declines in 1998 and 1999--the result of solid internal capital generation. Chubb's strong loss reserves, and the embedded economic value within them, largely mitigate this leverage. Furthermore, the group continues to be exposed to asbestos and environmental liabilities.

Chubb maintains modest exposure to catastrophes, which stems from management's effective reinsurance utilization and property monitoring efforts. The group also maintains prudent balance sheet liquidity, enhanced by very strong operating cash flow. Moreover, additional financial flexibility is afforded by the parent, which has ready access to the capital markets and modest financial leverage.

Combined, Chubb's domestic companies rank among the 15 largest property/casualty insurers in the United States with nearly $5 billion net premiums written in 1999.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.