Standard & Poor’s Ratings Services revised its long-term ratings outlook on Warren, N.J.-based Chubb Corp. and on Chubb’s operating insurance companies (financial strength “AA+”) to negative from stable.
The downgrading of the outlook reflects concerns about departures in senior management this year and ” the potential implications for the company’s prospective strategic direction and financial risk tolerance,” according to an S&P analyst.
Specifically, CEO Dean O’Hare announced his decision earlier this year to accelerate his retirement by year-end 2002. In addition, recently appointed CFO Weston Hicks resigned to accept a position outside of the company.
In conjunction with pending senior management changes, S&P is concerned about the prospective commitment to maintain capital at both the operating companies and parent holding company at levels sufficient to support the current ratings.
The very strong insurer financial strength ratings on Chubb’s operating insurance companies are based on consolidated leadership positions in a range of specialty insurance lines in both commercial and personal segments of the U.S. property/casualty industry. Operating performance is viewed as very strong, and Chubb is viewed as a disciplined underwriter. Year-to-date parent consolidated operating income totaled $388 million compared with $315 million in the same period 2001. Total parent shareholder equity totaled a very strong $7 billion with satisfactory financial leverage (total debt to adjusted capital) of 17 percent as of June 30, 2002.
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