UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
þ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
for the fiscal year ended December 31, 2011
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 1-8661
A. Full title of the plan:
CAPITAL ACCUMULATION PLAN OF THE CHUBB
CORPORATION
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
The Chubb Corporation (the Corporation)
15 Mountain View Road
Warren, New Jersey 07059
F I N A N C I A L S T A T E M E N T S A N D S U P P L E M E N T A L S C H E D U L E
Capital Accumulation Plan of The Chubb Corporation Year Ended December 31, 2011 With Report of Independent Registered Public Accounting Firm |
Capital Accumulation Plan of The Chubb Corporation
Financial Statements and Supplemental Schedule
Year Ended December 31, 2011
Contents
1 | ||||
Financial Statements |
||||
2 | ||||
3 | ||||
4 | ||||
Schedule H, Line 4i Schedule of Assets (Held at End of Year) |
17 |
Report of Independent Registered Public Accounting Firm
The Employee Benefits Committee
Capital Accumulation Plan of The Chubb Corporation
We have audited the accompanying statements of net assets available for benefits of the Capital Accumulation Plan of The Chubb Corporation as of December 31, 2011 and 2010, and the related statement of changes in net assets available for benefits for the year ended December 31, 2011. These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plans internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plans internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2011 and 2010, and the changes in its net assets available for benefits for the year ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2011 is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. Such information is the responsibility of the Plans management. The information has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
New York, New York
June 28, 2012
1
Capital Accumulation Plan of The Chubb Corporation
Statements of Net Assets Available for Benefits
December 31 | ||||||||
2011 | 2010 | |||||||
|
|
|||||||
Assets |
||||||||
Investments, at fair value: |
||||||||
Stable value funds |
$ | 348,171,360 | $ | 340,025,012 | ||||
The Chubb Corporation common stock |
418,901,373 | 383,898,446 | ||||||
Mutual funds |
932,742,191 | 955,313,903 | ||||||
Money market funds |
64,507,126 | 61,763,732 | ||||||
|
|
|||||||
1,764,322,050 | 1,741,001,093 | |||||||
|
|
|||||||
Receivables: |
||||||||
Employer contributions |
25,135,210 | 26,421,855 | ||||||
Notes receivable from participants |
24,023,239 | 23,884,296 | ||||||
Accrued interest and dividends |
2,369,323 | 2,387,424 | ||||||
Due from broker |
1,139,911 | 441,396 | ||||||
|
|
|||||||
52,667,683 | 53,134,971 | |||||||
|
|
|||||||
Net assets available for benefits reflecting all assets at fair value |
1,816,989,733 | 1,794,136,064 | ||||||
Adjustments from fair value to contract value for fully benefit-responsive investment contracts |
(12,562,783 | ) | (8,955,061) | |||||
|
|
|||||||
Total assets |
1,804,426,950 | 1,785,181,003 | ||||||
Liabilities |
||||||||
Accrued investment fees |
67,139 | 53,443 | ||||||
|
|
|||||||
Net assets available for benefits |
$ | 1,804,359,811 | $ | 1,785,127,560 | ||||
|
|
The accompanying notes are an integral part of these financial statements.
2
Capital Accumulation Plan of The Chubb Corporation
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2011
Additions |
||||
Investment income: |
||||
Realized gain on sale of mutual funds |
$ | 3,120,025 | ||
Unrealized loss on mutual funds |
(52,780,659) | |||
Realized gain on sale of The Chubb Corporation common stock |
3,672,026 | |||
Unrealized gain on The Chubb Corporation common stock |
56,359,657 | |||
Interest and dividends |
41,838,857 | |||
Other income |
24,619 | |||
|
|
|||
Total investment income |
52,234,525 | |||
|
|
|||
Interest income on notes receivable from participants |
1,075,603 | |||
Contributions: |
||||
Participant: |
||||
Pre-tax |
55,700,979 | |||
After-tax |
1,961,821 | |||
Employer |
25,257,230 | |||
Rollovers |
3,687,190 | |||
|
|
|||
Total contributions |
86,607,220 | |||
|
|
|||
Total additions |
139,917,348 | |||
|
|
|||
Deductions |
||||
Deductions from net assets attributable to: |
||||
Benefit payments |
120,622,343 | |||
Defaulted participant notes receivable, net |
20,247 | |||
Administrative expenses |
42,507 | |||
|
|
|||
Total deductions |
120,685,097 | |||
|
|
|||
Net increase |
19,232,251 | |||
Net assets available for benefits |
||||
Beginning of year |
1,785,127,560 | |||
|
|
|||
End of year |
$ | 1,804,359,811 | ||
|
|
The accompanying notes are an integral part of these financial statements.
3
Capital Accumulation Plan of The Chubb Corporation
Notes to Financial Statements
December 31, 2011
1. Plan Description
The following is a brief description of the Capital Accumulation Plan of The Chubb Corporation (the Plan). Participants should refer to the Plan document, which is maintained by the Employee Benefits Committee (the Plan Administrator), for a more complete description of the Plans provisions.
The Plan is a defined contribution plan and is subject to the provisions of the Employee Retirement Income Security Act (ERISA).
Eligibility
An employee becomes eligible to participate in the Plan on the first day of the month following completion of one full calendar month of service. Employees become eligible for employer matching contributions after either completion of one year of service and attainment of age 21 or the completion of two years of service if under age 21.
Contributions
Participants may elect to contribute pre-tax and after tax contributions, up to the maximum amount permitted by the Internal Revenue Code, but not greater than 50% of their compensation, as defined by the Plan. Effective July 1, 2008, the Company amended the Plan to provide automatic enrollment for eligible employees with initial pre-tax contributions by the employees of 4% of their compensation with an increase of 1% annually thereafter, to a maximum of 10%. Participants may also make rollover contributions from other qualified plans. The Employer matches 100% of participant contributions up to 4% of their annual compensation as defined in the Plan. Participants age 50 and older who contribute at least 4% of pre-tax pay qualify to make unmatched additional catch-up contributions according to the schedules and maximum amounts permitted by the Internal Revenue Code for each year.
4
Capital Accumulation Plan of The Chubb Corporation
Notes to Financial Statements (continued)
1. Plan Description (continued)
Vesting
Participants are immediately and fully vested in their contributions plus actual earnings thereon. Vesting in the Companys matching contributions plus actual earnings thereon is based on years of service, as follows:
Vesting % | ||||
Years of service: |
||||
2 |
20% | |||
3 |
40% | |||
4 |
60% | |||
5 |
80% | |||
6 |
100% |
Forfeitures
Employees who terminate employment prior to becoming 100% vested may forfeit the nonvested portion of their account balance, plus actual earnings thereon. Forfeitures, plus earnings thereon, can be used by the Company to reduce future employer contributions and to pay administrative expenses. Participants that resume employment prior to incurring five consecutive one year breaks in service are entitled to have previously forfeited amounts restored to their account. If forfeitures for any Plan year are not sufficient to restore forfeited amounts, the Company is required to contribute the remaining balance. Forfeitures from employees for the year ended December 31, 2011 were $521,248, with an available balance of approximately $522,319 available to reduce future employer contributions or to pay administrative expenses.
Participant Accounts
Contributions are invested by Fidelity Management Trust Company (the Trustee) according to the investment options elected by the participants and are held by the Trustee in a trust. For participants automatically enrolled, the investment option selected is the Vanguard Target Date Retirement mutual fund with a target date closest to the participants 65th birthday.
5
Capital Accumulation Plan of The Chubb Corporation
Notes to Financial Statements (continued)
1. Plan Description (continued)
Loans
Participants may borrow a minimum of $1,000 up to a maximum equal to the lesser of a) $50,000, b) 50% of their vested account balance, or c) 50% of the participants annualized rate of compensation, as defined, at the time the loan is requested. Their remaining vested account balance and annualized rate of compensation serves as collateral for the loan. Each participant can have up to two loans outstanding at any time as long as the two loans, collectively, do not exceed the maximum limits. The principal portion of the loan is repayable by check or through payroll deductions and bears interest at the prime rate, plus 1%, as determined on the last day of the month preceding the loan. As of December 31, 2011, the interest rates on outstanding loans ranged from 4% to 10%.
Loans that are in default are accounted for as a reduction of net assets available for benefits in the year the default occurs. As of December 31, 2011, the balance of defaulted loans approximated $197,714.
Payment of Benefits
Upon attaining the normal retirement age (65) or in certain circumstances, the attainment of age 59 1/2, a participant is entitled to his or her vested benefits in the form of a lump sum payment, an annuity or installment payments, as prescribed by the Plan. In addition, participants may withdraw funds from the Plan upon termination of employment or, subject to the approval of the Plan Administrator, participants may request a withdrawal of a portion of their balance in the case of financial hardship, as defined. If a participant dies before or after retirement or after termination, any remaining balance in his or her account is paid to his or her estate or beneficiary under any of the following payment options: (a) a lump sum, (b) installments as elected by the participant prior to death, or (c) installment payments as elected by the participants beneficiary.
Upon request, any lump sum distribution to a participant or his or her beneficiary from The Chubb Corporation common stock may be made in shares in lieu of cash payments.
6
Capital Accumulation Plan of The Chubb Corporation
Notes to Financial Statements (continued)
1. Plan Description (continued)
Administration Expenses
Unless paid by the Company, the Trustee pays the expenses of the Plan using plan assets. For 2011 and 2010, the following expenses have been paid by the Plan: (a) brokerage costs, (b) other expenses in connection with the purchase and sale of assets by the manager of funds, (c) fees paid for asset management, and (d) certain overhead expenses directly attributable to the administration of the Plan. Qualified Domestic Relations Order (QDRO) and loan request fees, if any, are paid for by the individual participant from the participants account, as these fees are not paid by the Plan sponsor or the Trustee.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accounting and financial reporting policies of the Plan are in conformity with accounting principles generally accepted in the United States of America (US GAAP).
Fair Value Measurement
The Plans assets and liabilities are valued at fair value as of December 31, 2011 and 2010 (see Note 4) with the exception of fully benefit-responsive investment contracts, which are carried at contract value, and participant loans, which are carried at their unpaid principal balance plus any accrued but unpaid interest.
The Stable Value Portfolio (Fully Benefit-Responsive Investment Contracts)
The Plan includes investments in a stable value fund that is fully benefit-responsive. The statements of net assets available for benefits presents the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The statements of net assets available for benefits are prepared on a contract value basis.
7
Capital Accumulation Plan of The Chubb Corporation
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Fidelity Management Trust Co. acts as the manager of the Stable Value Portfolio (SVP).
It is the policy of the manager of the SVP to use its best efforts to maintain a stable net asset value of $1.00 per unit; however, there is no guarantee that the manager will be able to maintain this value.
The SVP is invested in short to intermediate term fixed income securities and cash equivalents represented by shares in a money market fund. In addition, the SVP includes wrap contracts issued by third parties and may include derivative instruments such as futures contracts and swap agreements.
A wrap contract is an agreement by a third party, such as a bank or insurance company, to make payments to a portfolio in certain circumstances. Wrap contracts are designed to allow a stable value portfolio to maintain a stable net asset value of $1.00 per unit and to protect the portfolio in extreme circumstances. In a typical wrap contract, the wrap issuer agrees to pay a portfolio the difference between the contract value and the fair value of the underlying assets once the fair value has been totally exhausted. This could happen if a portfolio experiences significant redemptions (redemption of most of a portfolios units) during a time when the fair value of a portfolios underlying assets is below contract value, and fair value is ultimately reduced to zero. If that occurs, the wrap issuer agrees to pay the portfolio an amount sufficient to cover unitholder redemptions and certain other payments (such as portfolio expenses), provided all the terms of the wrap contract have been met. Purchasing wrap contracts is similar to buying insurance, in that a portfolio pays a fee to protect against a relatively unlikely event (the redemption of most of the shares of a portfolio). Fees the SVP pays for wrap contracts are offset against interest income.
A wrap issuer may terminate a wrap contract at any time. In the event that the fair value of the SVPs covered assets is below its contract value at the time of such termination, the manager of the SVP may elect to keep the wrap contract in place until such time as the fair value of the SVPs covered assets is equal to its contract value, normally over the duration of the SVPs covered assets measured at notification date.
The manager expects that a substantial percentage of the SVPs assets to be underlying the wrap contracts, although this may change over time. Assets not underlying the wrap contracts will generally be invested in money market instruments and cash equivalents to provide necessary liquidity for participant withdrawals and exchanges.
8
Capital Accumulation Plan of The Chubb Corporation
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
To reduce exposure of the SVP to wrap credit risk, wrap contracts are diversified across multiple wrap counterparties, each agreeing to wrap a certain percentage of the covered underlying assets. The SVPs ability to receive amounts due pursuant to these contracts is dependent upon the counterparties ability to meet their financial obligations (see Note 3).
The wrap contracts limit the ability of the SVP to transact at contract value upon the occurrence of certain events. Such events include the following: (i) amendments to the Plan including changes in the investment options, transfer procedures or withdrawal rights not consented to by the wrap issuer, (ii) termination of the Plan, (iii) changes to Plans prohibition of direct transfers from the SVP to a competing investment option, (iv) other Plan Sponsor events (e.g., divestitures or spin-offs of a subsidiary) that cause a significant withdrawal from the SVP or, (v) the failure of the plan to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The Plan Administrator does not believe that the occurrence of any such event, which would limit the Plans ability to transact at contract value with participants, is probable.
The crediting rate, and hence the SVPs return, may be affected by many factors, including purchases and redemptions by unitholders. The impact depends on whether the fair value of the underlying assets is higher or lower than the contract value of those assets. If the fair value of the underlying assets is higher than their contract value, the crediting rate will ordinarily be higher than the yield of the underlying assets. If the fair value of underlying assets is lower than their contract value, the crediting rate will ordinarily be lower than the yield of the underlying assets.
Investment Income
Purchases and sales of securities are recorded on trade dates. Gains or losses on the sale of securities are based on revalued cost. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
9
Capital Accumulation Plan of The Chubb Corporation
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Payment of Benefits
Benefit payments to participants are recorded when paid.
New Accounting Pronouncements
In January 2010, the FASB issued Accounting Standards Update 2010-06, Improving Disclosures about Fair Value Measurements (ASU 2010-06). ASU 2010-06 amended ASC 820 to clarify certain existing fair value disclosures and require a number of additional disclosures. The guidance in ASU 2010-06 clarified that disclosures should be presented separately for each class of assets and liabilities measured at fair value and provided guidance on how to determine the appropriate classes of assets and liabilities to be presented. ASU 2010-06 also clarified the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. In addition, ASU 2010-06 introduced new requirements to disclose the amounts (on a gross basis) and reasons for any significant transfers between Levels 1, 2 and 3 of the fair value hierarchy and present information regarding the purchases, sales, issuances and settlements of Level 3 assets and liabilities on a gross basis. The requirement to present changes in Level 3 measurements on a gross basis is effective for reporting periods beginning after December 15, 2010. Since ASU 2010-06 only affects fair value measurement disclosures, adoption of ASU 2010-06 did not have an effect on the Plans net assets available for benefits or its changes in net assets available for benefits
In May 2011, the FASB issued Accounting Standards Update 2011-04, Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs, (ASU 2011-04). ASU 2011-04 amended ASC 820, Fair Value Measurements and Disclosures, to converge the fair value measurement guidance in US generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRSs). Some of the amendments clarify the application of existing fair value measurement requirements, while other amendments change a particular principle in ASC 820. In addition, ASU 2011-04 requires additional fair value disclosures. The amendments are to be applied prospectively and are effective for annual periods beginning after December 15, 2011. Plan management is currently evaluating the effect that the provisions of ASU 2011-04 will have on the Plans financial statements.
10
Capital Accumulation Plan of The Chubb Corporation
Notes to Financial Statements (continued)
3. Investments
The following open-end wrap contracts were held by the SVP at December 31, 2011:
Wrap Contract Provider | Rating | Underlying Assets at Fair |
Underlying Assets at |
|||||||||
|
||||||||||||
AIG Financial Products Corporation |
A- | $ 55,367,393 | $ | 53,459,369 | ||||||||
JPMorgan Chase Bank, NA |
A+ | 117,216,631 | 112,751,106 | |||||||||
Monumental Life Insurance Co. |
AA- | 89,393,504 | 86,292,489 | |||||||||
State Street Bank & Trust Co. |
AA- | 86,193,832 | 83,105,613 | |||||||||
|
|
|||||||||||
Total wrap contracts |
$ 348,171,360 | $ | 335,608,577 | |||||||||
|
|
The following presents the individual investments that represent 5% or more of the Plans net assets:
2011 | 2010 | |||||||
|
|
|||||||
Stable Value Funds, at fair value |
$ 348,171,360 | $ 340,025,012 | ||||||
Mutual Funds, at fair value: |
||||||||
Dodge & Cox Balanced |
105,500,907 | 114,829,053 | ||||||
Spartan 500 Ind Advan. |
119,339,867 | 117,421,056 | ||||||
Fidelity Contrafund |
159,535,759 | 167,542,888 | ||||||
Fidelity Diversified International |
76,093,656 | 91,876,117 | ||||||
Common Stock, at fair value: |
||||||||
The Chubb Corporation |
418,901,373 | 383,898,446 |
At December 31, 2011 all wrap contracts held are fully benefit responsive. The average yield and crediting rate are reflected below:
2011 | 2010 | |||
| ||||
Average Yield |
2.17% | 2.33% | ||
Crediting Rate |
2.19 | 2.32 |
11
Capital Accumulation Plan of The Chubb Corporation
Notes to Financial Statements (continued)
4. Fair Value Measurements
ASC 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows:
| Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the plan has the ability to access. |
| Level 2 Inputs to the valuation methodology include: (a) quoted prices for similar assets or liabilities in active markets; (b) quoted prices for identical or similar assets or liabilities in inactive markets; (c) inputs other than quoted prices that are observable for the asset or liability; and (d) inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. |
| Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
The asset or liabilitys fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2011 and 2010:
| Stable Value Funds: Valued at the fair values of the underlying fixed income securities and terms of the underlying investment contracts as further discussed in Note 2. |
| The Chubb Corporation Common Stock: Valued at the closing price reported on the New York Stock Exchange (the active market on which the security is traded). |
| Mutual Funds: Valued based on quoted market prices, or if unavailable, directly from the fund company, representing the fair value of assets, minus liabilities. |
12
Capital Accumulation Plan of The Chubb Corporation
Notes to Financial Statements (continued)
4. Fair Value Measurements (continued)
| Money Market Funds: Valued at cost plus accrued interest, which approximates fair value. |
Assets at fair value as of December 31, 2011 are as follows:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
|
|
|||||||||||||||
Stable value funds |
$ | | $ | 348,171,360 | $ | | $ | 348,171,360 | ||||||||
The Chubb Corporation common stock |
418,901,373 | | | 418,901,373 | ||||||||||||
Mutual funds |
||||||||||||||||
Large-cap equity |
178,564,008 | | | 178,564,008 | ||||||||||||
Mid-cap equity |
91,941,444 | | | 91,941,444 | ||||||||||||
Small-cap equity |
53,656,752 | | | 53,656,752 | ||||||||||||
Multi-cap equity |
238,187,510 | | | 238,187,510 | ||||||||||||
International equity |
106,098,032 | | | 106,098,032 | ||||||||||||
Balanced funds |
105,500,907 | | | 105,500,907 | ||||||||||||
Target retirement date funds |
54,041,693 | | | 54,041,693 | ||||||||||||
Fixed income |
104,751,845 | | | 104,751,845 | ||||||||||||
Money market funds |
64,507,126 | | | 64,507,126 | ||||||||||||
|
|
|||||||||||||||
Total assets at fair value |
$ | 1,416,150,690 | $ | 348,171,360 | $ | | $ | 1,764,322,050 | ||||||||
|
|
Assets at fair value as of December 31, 2010 are as follows:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
|
|
|||||||||||||||
Stable value funds |
$ | | $ | 340,025,012 | $ | | $ | 340,025,012 | ||||||||
The Chubb Corporation common stock |
383,898,446 | | | 383,898,446 | ||||||||||||
Mutual funds |
||||||||||||||||
Large-cap equity |
176,351,110 | | | 176,351,110 | ||||||||||||
Mid-cap equity |
95,893,447 | | | 95,893,447 | ||||||||||||
Small-cap equity |
61,609,426 | | | 61,609,426 | ||||||||||||
Multi-cap equity |
244,724,783 | | | 244,724,783 | ||||||||||||
International equity |
131,401,302 | | | 131,401,302 | ||||||||||||
Balanced funds |
114,829,053 | | | 114,829,053 | ||||||||||||
Target retirement date funds |
34,563,801 | | | 34,563,801 | ||||||||||||
Fixed income |
95,940,981 | | | 95,940,981 | ||||||||||||
Money market funds |
61,763,732 | | | 61,763,732 | ||||||||||||
|
|
|||||||||||||||
Total assets at fair value |
$ | 1,400,976,081 | $ | 340,025,012 | $ | | $ | 1,741,001,093 | ||||||||
|
|
13
Capital Accumulation Plan of The Chubb Corporation
Notes to Financial Statements (continued)
5. Related Party Transactions
Certain Plan investments are shares of funds managed by Fidelity Management Trust Company (FMTC). FMTC is the trustee as defined by the Plan and, therefore, FMTC qualifies as a party-in- interest. Fees paid to FMTC by the Plan for management and administrative services amounted to $42,507 and $203,895 for the year ended December 31, 2011 and 2010, respectively.
6. Plan Termination
While the Company has not expressed any intent to terminate the Plan, the Company reserves the right to amend, modify or terminate the Plan at any time. In the event of termination, the value of participants accounts will be paid in accordance with the provisions of the Plan and the provisions of ERISA.
7. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service (IRS) dated August 19, 2011, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (Code) and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the IRS, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator believes the Plan has been operating in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax exempt.
Accounting principles generally accepted in the United States require plan management to evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. The Plan Administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2011, there are no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan Administrator believes it is no longer subject to income tax examinations for years prior to 2008.
8. Risks and Uncertainties
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain
14
Capital Accumulation Plan of The Chubb Corporation
Notes to Financial Statements (continued)
investment securities, it is reasonably assured that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits.
The Plans exposure to concentration of credit risk is limited by the diversification of investments. Additionally, the investments within each fund election are further diversified into various financial instruments, with the exception of The Chubb Corporation common stock. The Plans exposure to credit risk on fully benefit-responsive investment contracts is limited to the fair value of the contracts with each counterparty.
9. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation between the statement of net assets available for benefits per the accompanying financial statements and the Form 5500:
December 31 | ||||||||
2011 | 2010 | |||||||
|
|
|||||||
Net assets available for benefits per Schedule H of Form 5500 reflecting all assets at fair value |
$ 1,816,922,594 | $ 1,794,082,621 | ||||||
Adjustment from fair value to contract value for fully benefit-responsive investment contracts |
(12,562,783 | ) | (8,955,061) | |||||
|
|
|||||||
Net assets available for benefits at contract value per financial statements |
$ 1,804,359,811 | $ 1,785,127,560 | ||||||
|
|
10. Subsequent Events
Effective January 1, 2012, employees become eligible for employer matching contributions on the first day of the month following completion of one full calendar month of service as an eligible employee.
Effective January 1, 2012, participants will become fully vested in the companys matching contributions after completing three years of eligible service.
On February 10, 2012, the Vanguard Target 2005 Fund was merged into the Vanguard Target Retirement Income Fund.
15
Capital Accumulation Plan of The Chubb Corporation
EIN #13-2595722 Plan # 002
Schedule H, Line 4i Schedule of Assets
(Held at End of Year)
Year Ended December 31, 2011
(a) | (b) | (c) | (d) ** | (e) | ||||||
Identity of Issue, Borrower, Lessor or Similar Party |
Description of Investments, Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Date |
Cost | Current Value | |||||||
|
||||||||||
Stable Value Funds: |
||||||||||
JP Morgan Chase |
JP Morgan Chase |
$ | 117,216,631 | |||||||
AIG |
AIG Financial Products Co. |
55,367,393 | ||||||||
State Street Bank |
State Street Bank & Trust Company Boston |
86,193,832 | ||||||||
Monumental Life Insurance Company |
Monumental Life Insurance Company |
89,393,504 | ||||||||
Common Stock: |
||||||||||
* |
The Chubb Corporation |
Common Stock |
418,901,373 | |||||||
Mutual Funds: |
||||||||||
Dodge & Cox |
Dodge & Cox Balanced |
105,500,907 | ||||||||
T. Rowe Price |
T. Rowe Price Mid Cap Growth |
62,696,459 | ||||||||
Morgan Stanley |
MSIF CP FX Inc 1 |
63,214,547 | ||||||||
Vanguard |
Vanguard Value Index Inst. |
59,224,142 | ||||||||
Janus |
Janus High Yield Bond |
41,537,298 | ||||||||
Goldman Sachs |
GS Midcap Value Ins. |
29,244,985 | ||||||||
Vanguard |
Vanguard Small Growth Index Inst. |
15,731,252 | ||||||||
Allianz |
Allianz Nacm Pacific Rim I |
30,004,376 | ||||||||
* |
Fidelity Spartan |
Spartan 500 Ind. Advan. |
119,339,867 | |||||||
* |
Fidelity |
Fidelity Contrafund K |
159,535,759 | |||||||
* |
Fidelity |
Fidelity Diversified International K |
76,093,656 | |||||||
* |
Fidelity |
Fidelity Fund K |
24,469,781 | |||||||
* |
Fidelity |
Fidelity OTC K |
54,181,969 | |||||||
Royce |
Royce Low Priced Stock IS |
37,925,500 | ||||||||
Vanguard |
Vanguard Target Retirement Income |
2,559,629 | ||||||||
Vanguard |
Vanguard Target Retirement 2005 |
1,405,786 | ||||||||
Vanguard |
Vanguard Target Retirement 2010 |
1,917,813 | ||||||||
Vanguard |
Vanguard Target Retirement 2015 |
9,010,042 | ||||||||
Vanguard |
Vanguard Target Retirement 2020 |
11,569,851 | ||||||||
Vanguard |
Vanguard Target Retirement 2025 |
9,332,282 | ||||||||
Vanguard |
Vanguard Target Retirement 2030 |
6,112,822 | ||||||||
Vanguard |
Vanguard Target Retirement 2035 |
5,099,020 | ||||||||
Vanguard |
Vanguard Target Retirement 2040 |
2,724,585 | ||||||||
Vanguard |
Vanguard Target Retirement 2045 |
2,690,382 | ||||||||
Vanguard |
Vanguard Target Retirement 2050 |
1,518,567 | ||||||||
Vanguard |
Vanguard Target Retirement 2055 |
100,914 | ||||||||
Money Market Funds: |
||||||||||
* |
Fimm Government Port C1 I |
Money Market Fund |
52,266,379 | |||||||
* |
Interest Bearing Cash |
Money Market Fund |
3,457,372 | |||||||
* |
Fidelity STIF |
Money Market Fund |
8,783,375 | |||||||
Participant loans |
Interest rates from 4.00% 10.00% |
24,023,239 | ||||||||
|
|
|||||||||
$ | 1,788,345,289 | |||||||||
|
|
|||||||||
* |
Party-in-interest to the Plan. |
|||||||||
** |
Cost not disclosed as all investments are participant directed. |
17
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Employee Benefits Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
CAPITAL ACCUMULATION PLAN OF | ||
THE CHUBB CORPORATION | ||
By: | /s/ ROBERT B. WEINMAN | |
Robert B. Weinman, Chairperson of the Employee Benefits Committee |
Dated: June 28, 2012
EXHIBIT INDEX
Exhibit 23.1 Consent of Independent Registered Public Accounting Firm Ernst & Young LLP