John D. Finnegan - Chairman, President and CEO Thomas F. Motamed - Vice Chairman and COO John J. Degnan - Vice Chairman and Chief Administrative Officer Michael O'Reilly - Vice Chairman and CFO

Jay Gelb - Lehman Brothers Clifford Gallant - Keefe, Bruyette & Woods Joshua Shanker - Citigroup David Small - Bear Sterns Jay Cohen - Merrill Lynch Ian Gutterman - Adage Capital

Good day everyone, and welcome to The Chubb Corporation's Third Quarter 2007 Earnings Conference Call. Today's call is being recorded. Before we begin, Chubb has asked me to make the following statements. In order to help you understand Chubb, its industry and its results, members of the Chubb's management team will include in today's presentation forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. It is possible that actual results might differ from estimates and forecasts that Chubb's management team might make today. Additional information regarding factors that could cause such differences appear in Chubb's filings with the Securities and Exchange Commission. Please also note that no portion of this conference call may be reproduced or rebroadcast in any form without the prior written consent of Chubb. Replays of this webcast will be available through November 23, 2007. Those listening after October 23, 2007 should please note that the information and forecast provided in this recording will not necessarily be updated, and it is possible that the information will no longer be current. Now, I will turn the call over to Mr. Finnegan. John D. Finnegan - Chairman, President and Chief Executive Officer: Thank you for joining us today. As you read in our press release, we continue to post record results with operating income per share of a $1.68, up 23% from the third quarter of 2006. We had a record low combined ratio of 81.6%, driven once again by terrific performance in all three strategic business units, each of which posted a better combined ratio this quarter than in the third quarter of last year. This brings our year-to-date operating income to a record $1.9 billion or $4.81 per share, which means we earned more in the first nine months of 2007 than we earned in any full year of our history with the exception of 2006. As you've seen we are raising the midpoint of our 2007 full year guidance for operating income per share by $0.20 to $6.10. This reflects our excellent nine months results and our expectation of continued strong performance in the fourth quarter, tampered only by the uncertain impact of the California wildfires. As a result, we have decided to take the conservative approach of maintaining the four point cat assumption for the year in our guidance, which implies 7.7 points of catastrophe losses in the fourth quarter. I'll talk more about this later. And now, Tom Motamed, will say a few words about our operating results. Thomas F. Motamed - Vice Chairman and Chief Operating Officer: Thank you, John. Once again we had a great quarter with $569 million in underwriting income, an increase of 31% over last year's third quarter. We continue to have excellent performance by all three SBUs, as reflected in our combined ratio of 81.6%. CPI and CCI were under 85%, and CSI was well under 80%. Catastrophe losses accounted for 2 points of the combined ratio, and were related primarily to the U.K. floods in July and the Midwest storms in August. We continue to experience very favorable loss trends in all our SBUs, particularly in the professional liabilities classes. Mike will provide more details on this later. But for now, let me note that we had overall favorable development in the third quarter of about a $150 million, improving the quarter's combined ratio by about 5 percentage points. Chubb Personal Insurance net written premiums grew by 7%. And CPI produced a combined ratio of 83.3% including 5.2 points of catastrophe losses. In last year's third quarter CPI had a combined ratio of 84.1% including 4.1 points of catastrophe losses. In personal auto premiums declined 7% due to the ongoing competitive marketplace but our combined ratio was 91.1%. And other personal lines premiums increased 22% driven by our accident business particularly outside the U.S. The combined ratio for other personal was 99%. CPI's outstanding results were driven by homeowners which accounts for about two thirds of CPI's premiums. Homeowners grew 8% and had a combined ratio of 76.8% including 8 points of catastrophes. Chubb Commercial Insurance also continued to produce great results with our third quarter combined ratio of 84.4% compared to 85.4% last year. CCI had eight-tenths of a point of catastrophes this year compared with seven-tenths a point last year. CCI net written premiums decreased 3% in the third quarter and 1% in the first nine months. In the U.S we retained 84% of business up for renewal in the third quarter with an average rate decrease of 4% and the new to lost business ratio was 0.8 to 1. CSI delivered an outstanding third quarter combined ratio of 76.3% which is 10 points better than last year, driven by strong performance in both professional liability and surety. Professional liability had a combined ratio of 81.8% compared to 91% in last year's third quarter reflecting significant favorable development. Loss trends continued to be excellent, as we realized the benefits of an ongoing favorable loss environment and the underwriting changes we implemented several years ago, including lower limits and a shift towards the middle market. Professional liability premiums declined 4%. In the U.S. third quarter renewal retention was 88%. Average renewal rates were down 6% and the ratio of new to lost business was 1.4 to 1. Net written premiums for our surety business grew 3% and the combined ratio was 30.8%. Before I conclude, I am aware that there are a lot of rumors and anecdotes out there about what's going on in the market. So let me take you through our perspective. As I indicated our third quarter retention rates ran at 84 in commercial and 88 in specialty. Our U.S. rates were down 4% in commercial and down 6% in specialty. To me these rates declines on retained business are what one would expect in a softer market environment. From a new business perspective, competition continues to escalate. Clearly some carriers are willing to offer some quotes that can only be judged as you are responsible. Our new to lost business ratio in the U.S. was below one to one in commercial, reflecting our discipline in today's more competitive market environment. Looking back over the course of the year our rates are down at a few points from the first quarter, retention is about the same and the new business environment has worsened. Putting these all together, I would say that market for us was incrementally more competitive in the third quarter than in the first half of the year but not dramatically so. Chubb is in the enviable position of having a combined ratio 10 points below the industry average. Even at these levels, however, we strive to maintain pricing discipline. Some rate reductions may be warranted on our most profitable accounts, and we give them. Fortunately, our starting point provides us with some latitude to give reasonable price reductions. Turning now to our view of the overall market we would expect an increasingly competitive environment in the fourth quarter. Based on trends we have seen so far this year as well as the customary fourth quarter push by some competitors to meet growth targets. However, any belief by those competitors that protractive [ph] and substantial rate reductions will provide profits in the future is misguided. According to A.M. Best report on the top 25 U.S. property and casualty companies, this is an industry whose average combined ratio in the first half of this year was over 93. And that was a benign cat period and before 2007 rate reductions are fully flowed through to their bottom line. At some point, carriers will recognize the obvious mathematics that a couple of more years of 5% to 10% rate reductions will turn underwriting profits into losses. Moreover not all carriers are starting in the same place and some have less run way than others for continued rate reductions over time. And now I'll turn it over to John Degnan. John J. Degnan - Vice Chairman and Chief Administrative Officer: Thanks Tom. I want to address this afternoon three subjects, the California wildfires, sub-prime lending, and prospects for TRIA extension. First the California wildfires are a catastrophic event that is still developing as this call is underway. All we can give you today is what we know now. The ultimate outcome obviously depends on containment efforts and the weather. We are aware of about 13 fire areas in California. But based on our exposure analysis we are primarily concerned about three of them, Malibu in Los Angeles County and Coronado Hills and Washito in San Diego County. As of now we have only about 25 claims but based on the presence of insured locations and the potentially impacted areas we are deploying an adjuster force which would accommodate a higher number of claims. It is obviously not possible based on the uncertain paths of fires to quantify or even project what our loss will turn out to be. Our immediate priority is gearing up to meet the expectation of our insurers and our producers and to deliver the quality claim service we are known for. Turning now to sub-prime. Because of our underwriting practices over the last several years we do not believe we have any substantial exposure for those institutions engaged in sub-prime lending. Or from mortgage brokers who may have E&O exposure based on their involvement in those transactions. There is of course an expanding array of companies which may be pulled into litigation as the sub-prime lending allegations broaden beyond those directly involved to others such as home builders, rating agencies and entities involved in securitization. Even including that broader categories the number of claims received so far by us has been quite modest. Moreover, there are a couple of factors which would tend to limit our exposure. As mentioned by Tom we have been providing lower limits than in the years 2002 and prior. And almost all of the policies potentially implicated by these claims attach at access layers minimizing our exposure to defense costs. Finally regarding TRIA extension after the events of last week we continue to believe that TRIA will be renewed shortly. As you know the House passed a 15-year extension which includes NBCR and unfortunately a post event funding contingency which would make it very difficult to administer from the insurance perspective. Last Wednesday, the Senate Banking Committee passed its own TRIA extension bill by vote of 20 to 1 reflecting agreement between Chairman Dodd and ranking minority member Shelby. If we change [ph] the $100 million trigger, extends TRIA for seven years and includes domestic terrorism. Language clarifying the industry's liability cap is included as well. Unlike the House bill, NBCR is not included. We assume that this committee bill will get a strong Senate vote. It then must be reconciled with the House bill which in addition to NBCR includes a 15 year revenue rather than 7 year extension. We believe that a reason of both bills will emerge from that conference in a form which will allow the President to sign. And now I'll turn it over to Michael O'Reilly. Michael O'Reilly - Vice Chairman and Chief Financial Officer: Thanks John. In addition to terrific underwriting income in the third quarter, property and casualty investment income after tax increased by 10%. Property and casualty invested assets increased to $37.6 billion as of September 30, 2007 from $35.3 billion at year end 2006. Our fixed income portfolio remains heavily weighted in tax exempt funds and has an average duration of approximately 4.4 years. The unrealized depreciation in the fixed income portfolio at the end of the third quarter was $123 million. Book value per share under GAAP at September 30, 2007 was $37.12 compared to $33.71 at year end 2006. Book value per share calculated with available for sale fixed maturities at amortized cost was $36.93, compared to $33.38 at 2006 year end. Tom mentioned the impact of favorable loss development in the third quarter. We estimate that favorable development on prior year loss reserves by SBU was as follows. We had about $15 million of favorable development in CPI, about $20 million in CCI and about $85 million in CSI, nearly all of it in professional liability. We also had about $30 million in reinsurance assumed, bringing the total favorable development to about $150 million for the quarter. For comparison, in the third quarter of 2006, we had about $40 million of favorable development for the company overall, including adverse development of about $5 million in CPI and $15 million in CCI, and favorable development of about $40 million in CSI and $20 million in reinsurance assumed. During the third quarter of this year, our loss reserves increased by a $172 million. Reserves and reinsurance assumed which is now in run-off declined by $65 million. Reserves in the insurance business increased by $237 million, including approximately a $135 million related to currency fluctuation. The expense ratio for the third quarter was 29.8 versus 28.6 in the third quarter of last year. This increase was due largely to two factors. One, higher commissions attributable mainly to premium growth outside the U.S. in certain classes of business for which commission rates are high. And two, somewhat higher operating expenses on lower net premium. Turning to capital management. During the third quarter of 2007, we repurchased 10.2 million shares at an aggregate cost of $519 million. Under the current authorization as of September 30th, there was 7.9 million shares available for repurchase. Depending on our marketing conditions, our intention is to complete this repurchase of all these shares by the end of the year. Before I pass it back to John Finnegan, let me address a question that I am sure is on your mind. As I mentioned in our second quarter conference call, our investment portfolio has not had, and does not have any direct exposure to either sub-prime mortgages or collateralized debt obligation. In that context, let me address for a moment our alternative investment portfolio, which was valued at $1.9 billion at September 30, 2007 and represented about 5% of our total investment portfolio. We have been in the alternative space for many years. Its portfolio is well diversified and is being constructed to take advantage of broad global economic trends. Portfolio is made up almost entirely of limited partnerships, including private equity, both in and outside the United States, distressed debt in Asian real estate. Most of these partnerships are with investment managers with whom we have long-term relationships. Unlike many of our competitors, we do not include mark-to-market valuation changes in operating income, but rather include them in realized gains or losses. The significant capital gains we have realized over the past several years are mainly attributable to these investments. Our alternative investments have performed very well during the period of stress in the markets. Since mark-to-market changes in our alternative investments are booked on a one quarter lag because of the timing of our receipt of valuation data from the investment managers, the numbers you see reflect performance in the three months ended June 30th. While we don't know exactly what will be reported to us for the third quarter, the information that we have currently suggests that these investments performed well. And now I'll turn it back to John Finnegan. John D. Finnegan - Chairman, President and Chief Executive Officer: Let me make a few concluding remarks about the results. Needless to say, we're thrilled with Chubb's performance, spectacular earnings for the third quarter in the first nine months reflect both strong performance in the current accident year, due to our ability to maintain underwriting discipline in a competitive market, and favorable development largely related to the recognition of the increasingly positive loss trends we have been experiencing in prior accident years. Based on our excellent results for the first nine months and our outlook for the fourth quarter, we are increasing our guidance for operating earnings per share to a range $6.05 to $6.15. It's important to recognize that in revising guidance, we have decided to maintain our 4% cat assumption for the year, which implies a high 7.7% cat level for the fourth quarter. This fourth quarter cat assumption is not based on actual losses to date in California, but on the fact that we have insured in some of the potentially affected areas. Given the uncertain impact of these fires, we thought that it made sense to maintain our current cat assumption for the year, rather than speculate on the level of fourth quarter cats. The strength of our operating performance is reflected in the fact that despite the 7.7 point assumed cat level, we are still projecting fourth quarter earnings of a $1.24 to a $1.34 per share. In terms of the sensitivity analysis, a 1 point difference between actual and assumed cat levels in the fourth quarter would have a $0.05 per share impact on operating income. To sum up, this was our fourth consecutive record quarter with the lowest combined ratio in Chubb's history. For the first nine months, each of our SBUs made a very substantial contribution to our profitability with combined ratios of 82.6 for CPI, 85.9 for CCI, and 78.3 for CSI. Underwriting income was $1.6 billion. P&C investment income after tax was up 9%. Net income was $2.2 billion, including operating income of $1.9 billion. Through our share repurchase programs, we returned $1.7 billion to shareholders, and are well on our way to completing all currently authorized repurchases by the end of the year. And adjusted book value per share grew 11% during the first nine months to $36.93 at September 30th. We had the best first nine months in Chubb's history, and we expect to be back to you in three months with a report of our fifth consecutive year of record performance. With that I will open the line to your questions. Operator. Operator? Question And Answer

Thank you. The question-and-answer session will be conducted electronically. [Operator Instructions]. And we'll take our first question from Jay Gelb [Lehman Brothers]. Jay Gelb - Lehman Brothers: Thank you. The fires you are most focused on the California and that one a little fast. There was Malibu and then I believe two others? John D. Finnegan - Chairman, President and Chief Executive Officer: Yes, it was Washito in San Diego County and Coronado Hills in San Diego County as well. Jay Gelb - Lehman Brothers: Okay. And can you give us a sense John of the efforts you have made over the years to reduce the brushfire exposure in California given the history of that loss exposure in the state? John D. Finnegan - Chairman, President and Chief Executive Officer: Yes, I will let Tom speak to that. Thomas F. Motamed - Vice Chairman and Chief Operating Officer: Yes. I think, after the Oakland fires many years ago, we have really done a great job mapping our individual exposures in personal lines as well as commercial. And we have monitored that pretty well. The fact that wildfires are by nature a catastrophic is very difficult to manage from an underwriting standpoint, but we think we have done a pretty good job on that. Obviously, we buy reinsurance for catastrophes, so we feel pretty good about our reinsurance program. But fires of this proportion if you cut down most of the brush, things are still going to burn. And quite honestly, these fires jump and their sparks going everywhere. So, we think we have done a good job, time will tell. But California is not a huge state for us in homeowners. But in particular, these territories that John mentioned to have a concentration of high net worth individuals. Jay Gelb - Lehman Brothers: Just following up on the fires. Can you recall where your reinsurance attaches for California? And also the last large brushfires were in 2003, I don't know if you recall how large Chubb's losses were in '03 from the fires? John J. Degnan - Vice Chairman and Chief Administrative Officer: Yes, I think that was $38 million Jay, it's in that neighborhood. And this would... the cat treaty that would apply here would be our normal cat treaty. We've got initial $350 million retention, and then it goes up towell over a $1.3 million for this risk. We have also got a property for risk reinsurance treaty that we protect this against commercial losses. And that's a $515 million treaty, excess over $25 million initial retention. And then there is a couple of other little treaties that interact. There is a personal lines treaty which deals with homeowners' losses above $12 million for an event. And then there is an art schedule which would also kick in above $2 million for individual fine arts that were scheduled that way. So, that our retentions are... you know are basically what they are. But in terms of anything going above that, we are pretty well protected. John D. Finnegan - Chairman, President and Chief Executive Officer: So, it's property for risk treaty $25 million per loss. John J. Degnan - Vice Chairman and Chief Administrative Officer: Per loss, yes, right. Jay Gelb - Lehman Brothers: 25 million per loss in the property for risk. John J. Degnan - Vice Chairman and Chief Administrative Officer: Right. John D. Finnegan - Chairman, President and Chief Executive Officer: Retention is $25 million per loss. Jay Gelb - Lehman Brothers: Per loss, okay. And then separately on the sub-prime D&O, if I recall correctly, before 2002 there was some significant contract extensions in terms of blended programs, investment bank, E&O, lenders' liability, limits per account were much higher. Can you talk about the shifts you have made and pulling back in those areas and how that might minimize sub-prime D&O and E&O exposure? John D. Finnegan - Chairman, President and Chief Executive Officer: Okay. First of all it's... there were also multiyear contracts back in the bad old days to 2002 and prior. I mean the market had basically begun to hell in a hand basket and was reflected both in pricing and terms and conditions. Since then as we described to you several times that we have executed a strategy of migrating a good part of the book toward the middle market, rather than the Fortune 200. We attach at higher access layers more so than we did in 2002 and prior. We therefore exposed ourselves to defend cost much frequently than we did. In the prior... the limits are much smaller now than they were then. The Chubb limits then were $25 million less than on a program, but because we acquired exactly the risk in '99 we had an aggregation of risk on a lot of those 2002 prior accounts which had us exposed to $50 million or $75 million and on the larger accounts. We also had overlapping coverage between D&O and fiduciary by and large in underwriting strategy. Now we've tried to either make them linked coverages so that they... if you pay under one you don't have to pay under the other or we disciplined ourselves and not aggregating our exposure by writing them both with aggregated exposures. With the whole host of things this suggests the marketplace is very different today. We made a big and fortuitous decision on the underwriting side to get out of the mortgage brokers program which was a national program that we ran for several years which frankly I think will trigger a significant number of losses once they get pulled into the litigation orbit. Their claims made policies so we got to offer them, somebody else but on them and those losses will begin to emerge happily in somebody else's book, but not ours. So we're pretty pleased and I think Tom spoke on the underwriting side. Get a lot of compliments from us on the claim side about managing the underwriting risk here in a way to make this great manageable exposure. Jay Gelb - Lehman Brothers: Okay. Thanks for the answers.

And now we'll move on to Cliff Gallant. Clifford Gallant - Keefe, Bruyette & Woods: Good afternoon. Good quarter. John D. Finnegan - Chairman, President and Chief Executive Officer: Thank you. Clifford Gallant - Keefe, Bruyette & Woods: I just want to confirm that on the D&O policy. There are claims made so I'd assume the net, year-to-date loss ratio in professional line does fully reflect your estimate of, what your exposure is? John D. Finnegan - Chairman, President and Chief Executive Officer: I think... our reserves are IBNR and our case reserves reflect what our estimate of what our exposure will be including the emerging claims in sub-prime category. Clifford Gallant - Keefe, Bruyette & Woods: And have you seen a drop in claims notices with equity market rebound, over the last six to eight weeks? John D. Finnegan - Chairman, President and Chief Executive Officer: Well, we have actually through the year seen a significant decline in what we call, severity claims which are those primarily in D&O financial institutions, E&O lines and these are claims I think I have explained before that we closed severe not because of a dollar amount but because they come out of securities class action or reach of fiduciary duty or mergers and acquisitions, accounting re-statements. Those have traditionally been the types of claims in this line that really drive our loss cost. And as I said we have seen a very significant decline in a number of those claims through the first nine months of 2007. The industry seems something of a decline as well, little bit of an uptick for the industry in the last month or two, we haven't seen anything noticeable about that, but we think between managing our own books and the trends we are in good shape there. Clifford Gallant - Keefe, Bruyette & Woods: And of course you got to tell us who that some one else's who picked up the national program for the mortgage brokers? John D. Finnegan - Chairman, President and Chief Executive Officer: In the old days we would have but now I am tempted, but I won't. Clifford Gallant - Keefe, Bruyette & Woods: Thank you very much.

And we'll take our next question from Bill Vault [ph].

Hi, good afternoon. I guess sticking with a theme of securities litigation cases could you give some commentary on the Stone Ridge Partners versus Scientific Atlanta case, it was just heard before the Supreme Court, your perspective on it, secure handicap, would that be... the outcome of that will be great. But were it to be decided in favor of the petitioners, a huge deal from your perspective for securities litigation cases. John D. Finnegan - Chairman, President and Chief Executive Officer: Yes, this is a case with significant potential impact on the litigation climate out there. I wouldn't hesitate to handicap, we're going to win the case I think by virtue of an analysis of the arguments and a number of questions came from the justices. It was a closely divided court in the central bank case. But some of those on the wrong side of that decision are off the court justice, Chief Justice Roberts and the other new Justice I think tend to lean toward businesses side in this kind of issue. But essentially what's at risk here is that the companies are on aiding and abetting theory will be pulled into litigation orbit. Notwithstanding the fact that they made no representations to the investing public on which there could be reasonable reliance to further the kind of scheme that was at risk there. This is not a wrong without a remedy. The SEC clearly has the right to go after those companies and Congress has ratified that, not many years ago. The question here is what the civil liability should attach on litigation system. Notwithstanding Congress' clear intent we think to put that power into the SEC, but not into the litigation arena. Should the court go the wrong way and allow an aiding and abetting theory it will lead to more litigation against more companies, I suppose from an underwriting perspective we'll sell more D&O as a result of that. And if we do our underwriting well, we'll contain our losses. But all in all, we rather not see or insurers get stuck with an expanding degree of liability. I think most of the commentators I have read taking the transcript and the questions in their entirety are fairly positive about the likelihood of a good outcome although I have not read enough transcripts of oral arguments to know it. It's hard to make a definitive prediction.

To or in the timing I am fearing the usual length of time for the Supreme Court to come back. John D. Finnegan - Chairman, President and Chief Executive Officer: It can take anywhere from three to nine months. They usually do a pretty good job at deciding all the cases before the term ends which wouldn't be until next June. What I suspect given the relative clarity of the questions here and the importance of the issues and the fact that the Solicitor General came in on the side of the defendant companies that I hope will see decision within three or four months.

Thanks for that. And other one much shorter, when was it that the Chubb got off the E&O, the national E&O program for mortgage brokers? John D. Finnegan - Chairman, President and Chief Executive Officer: About three years ago.

Three years. Thanks very much

Then we'll move on to Josh Shanker. Joshua Shanker - Citigroup: Good evening. John D. Finnegan - Chairman, President and Chief Executive Officer: Good evening. Joshua Shanker - Citigroup: My first question involves the retentions you talked about 84% and 88% retention in the commercial and specialty. Of the new business that you have been writing is the character similar to the legacy book? Are you finding some niche areas that are more attractive and how competitive is the pricing for new business that you are out seeking? Thomas F. Motamed - Vice Chairman and Chief Operating Officer: From an underwriting strategy standpoint, we are under... we are going after the same things. We have been going after for years. Really no change there. Probably the only exception is in the wholesale area we're writing more what we would call a program business which are aggregations of individual risk that are homogenous. So we are writing more business there. That would be a difference but clearly it's the same underwriting strategy the same niches. In some cases, we do what we call an adjacency to something we are already doing today. But for your purposes, it's the same stuff we have been doing for a long time. New business no surprise, it's more competitive and we are writing business that we think is profitable at the rates we're writing it at. Now the fact of the matter is we are definitely seeing a more competitive marketplace as people go after new business, and we're being a lot more cautious about the volume of new business that we write as reflected in commercial where it's 0.8 to 1 net to lost. So we're watching what's out there. If we can price it right we'll write it but I would say we are writing it at a discount compared to the renewal book. But when you're starting with combined ratio in the low to mid 80s you got a little room to do that. Joshua Shanker - Citigroup: And the second question, would be at all possible to give any color into the vintages surrounding favorable development that you've been experiencing? John J. Degnan - Vice Chairman and Chief Administrative Officer: Well, we could take the big one which is professional liability right and that's... I think the good news is no adverse development on the old years and basically 2003 to 2005 is the favorable development. Mike, you talked of reinsurance assumed. Michael O'Reilly - Vice Chairman and Chief Financial Officer: Yes. Reinsurance assumed which is in run-off and we had some favorable development last year. We've got some more this year. So yes I mean it's... when we're not seeing any adverse development at all now in professional liability in the 2002 and prior years. So what we're... the favorable development we are seeing is really 2003 and forward. Joshua Shanker - Citigroup: Well. Thank you very much.

And moving on to David Small. David Small - Bear Sterns: Yes. Good afternoon. Just a follow up to something you just said. On the program business could you just quantify how big Chubb's program business is? Thomas F. Motamed - Vice Chairman and Chief Operating Officer: We usually don't give that number out. It's growing very nicely I can tell you that. It's very profitable but it's really relatively new endeavor for us, over probably the last three years. Part of that business is driven by managing general agents and wholesalers but we have never given a number out of that. John J. Degnan - Vice Chairman and Chief Administrative Officer: One thing we have said, in recent call is that we've been doing more business with Star Aviation, and that's been a sort of a growing area for it, but in realm of things, it's not a huge part of our business. David Small - Bear Sterns: Okay, and then you talked about earlier the very favorable loss trends that you've seen. Have we gone to the point though now where actual price declines are going down faster than the benefits you're seeing on the loss ratio... on the loss trend side? John D. Finnegan - Chairman, President and Chief Executive Officer: I think, if you took... you got different lines of business but if you took our overall business the answer is a little but really not much to see. I mean but let's take personal lines is obviously not in homeowners is a subject of the same cyclical issues, and it's a separate price declines. But we took CCI for example, the commercial business. Our accident year, ex-cat results in this quarter were about three points less favorable than they were last year. So you are seeing some margin compression in commercial and ever rated to believe that given rates of decline of 4% that you're going to continue to see some, not as much as one might have expected for rate declines over the last three years, but you've seen it. And CSI, of course we had such favorable loss trends, and such favorable developments that it hasn't been an issue. CPI again not subject to the same fluctuation. So not a big deal, if you look at the whole thing, on this accident year versus last accident year, an initial picking from the last year, you really are talking about 1.7 points higher combined ratio, accident year, and if you want ex-cat a 0.5 point higher. So some especially in commercial where you expected but not dramatic yet, so would be. David Small - Bear Sterns: Okay. Thank you very much.

[Operator Instructions]. We will move on to Mr. Josh Smith.

Hi thanks for the question. On the fires 7.7 ahead of the four estimated for the year you're talking about an incremental $120 million estimate for the fire should it be tripled which you had in '03. It appears conservative given you're less than 1% market share, but I guess you are saying is much that you're just being conservative at this point? John D. Finnegan - Chairman, President and Chief Executive Officer: Well I think we're saying two things. One, we're not 7.7 isn't picked by us. We're just saying in the absence of an ability to project we're going to keep our cat assumption where it is the 4 for the year that implies 7.7. You also have other things that could happen during the year, so the hurricane season. But I would say though that I don't think we should necessarily use the last one as the... as a benchmark. I mean it depends where it hits. There are a few spots where this hurricane could hit, but we have higher insured than -- Thomas F. Motamed - Vice Chairman and Chief Operating Officer: Fire. John D. Finnegan - Chairman, President and Chief Executive Officer: Fire, I am sorry. You've got in a hurricane kit. We have higher insureds, higher play tones and then we are the last one hit. But then again it depends where the wind goes and then what happens in the fire. So, don't know but I mean we don't necessarily excel to say at a 38 million is as high as they can get. We don't know what the industry event will be. We have low market share but we do have some high priced homes in some of these areas.

And then on the... thank you for that answer... and then on the reserve development several quarters in a row, now you have exceptionally favorable development. Have you started to bring... you mentioned professional liability, so am I to assume you're sort of taking down the longer tail line and is not just short tail positive development? And could you give us some color on the IBNR as a percent of total reserves? John D. Finnegan - Chairman, President and Chief Executive Officer: What we have said is the favorable development is basically related to the 2003 and 2005 accident years. Now to go back over the last couple of years, the evolving situation was two to three years ago. We used the adverse development in 2002 and prior and the subsequent year for it to mature. Now we're seeing... then we saw an interim stage where we had favorable development on 2003 and 2004 partially, though largely offset by adverse development in 2002 and prior. Then we saw a more favorable development in subsequent years partially offset by prior and now in a way we have the best of all worlds for a time being which is favorable on 2000 through 2005 and at least this quarter and it looks like a trend we no longer see... have been seeing adverse development on the 2002 and prior.

I am sorry. Did you... have you provided the IBNR percentage of total reserves? Thomas F. Motamed - Vice Chairman and Chief Operating Officer: It's in the 10-Q.

It's in the Q. Thank you very much.

And we'll move on to Matthew Himerman [ph].

Hi good evening everyone. Quick follow-up on the fires. I guess I would be curious as to what the average replacement value of the homes in those areas, is just to put into context the conservativeness you are guiding us to? John J. Degnan - Vice Chairman and Chief Administrative Officer: Well we don't have that number but most of our policies as you know provide extended replacement cost which is we don't cover the cost of rebuilding on the site, the house in the same reasonable condition it was... to build a new. So I don't have and I don't know whether you do it. An insured value average for a house there would be well over the lot. John D. Finnegan - Chairman, President and Chief Executive Officer: Three different areas and you're also taking living cost, I mean variety of things, where there is some potential, it's not a big commercial area but there's some commercial losses. And it's not... our point is that no real way of a value aided at this point in time and got to no result yet. We haven't seen where the fires have gone. I mean as John said we have only had a few claims, but that was pretty early and depends where the fires go.

No, that's right. I just was trying to get a read on the... if you see some of these more of a [multiple speakers] John D. Finnegan - Chairman, President and Chief Executive Officer: The big homes.

Yes, right. I just was trying to get indication of the magnitude of this severity. Thomas F. Motamed - Vice Chairman and Chief Operating Officer: What you need to remember is our market is the high net worth market. So, these are people with considerable assets. They have very nice homes, the best neighborhoods that kind of thing. And as John mentioned, if there are... if there is significant damage or it's a total, you also have additional living expense which can be used... can be considerable in these.

All right. Now that's helpful. I guess, the other question I had was just in terms of the market environment, if you could just opine on terms and conditions. Thomas F. Motamed - Vice Chairman and Chief Operating Officer: Yes. I would say that if you look at the commercial business, the only thing we are seeing happening on terms and conditions is what we would call people throwing in supplements or increasing quake or flood. They are not charging for it, they are putting it in there, so that they can retain as much of the premium as possible, but no major erosion in commercial. I think if you look at the professional liability business, commercial D&O is what's getting hit the most on the rate side. E&O seems to be pretty stable on terms and conditions, so that is not deteriorating. So, I would say little bit on terms and conditions in commercial really nothing to speak up in specialty. Really at this point a lot of it has to do with just pricing.

Okay. I appreciate it. Thank you.

And now we'll hear from Jay Cohen. Jay Cohen - Merrill Lynch: Just two questions. Some other personal lines, homeowner writers have seen an increase in claims' frequency on the homeowner side. I was wondering what you are seeing there. And then the second question, small number but the surety business had positive losses in the quarter, and I am wondering what drove that. John J. Degnan - Vice Chairman and Chief Administrative Officer: We are not seeing any noticeable change in frequency on homeowners ourselves. Jay Cohen - Merrill Lynch: okay. John D. Finnegan - Chairman, President and Chief Executive Officer: And surety, I think is one recovery and it doesn't take... it doesn't hit many millions with the basis at that high. Jay Cohen - Merrill Lynch: Okay, so recovery then -- John D. Finnegan - Chairman, President and Chief Executive Officer: So, it's no loss and one recovery basically. Jay Cohen - Merrill Lynch: Great. Thank you.

[Operator Instructions]. We'll go now to Ian Gutterman. Ian Gutterman - Adage Capital: Hi guys. I was hoping if you could just give us an update on how you are thinking about capital structure. I think the premium to surplus was under 0.93 which is the lowest spending as long as I can remember. You're also buying back a ton of stocks, so it's not like you are not trying. But even in the face of all that, it still keeps going down, and I guess, I am just wondering how you are thinking about giving a little bit more leverage into the company to get just sustained returns as the market softens. Is it more buyback? Is it dividend? Is it you think there is growth opportunities we are not seeing right now, small acquisitions on the table? I am just kind of curious how you are thinking about that. John D. Finnegan - Chairman, President and Chief Executive Officer: Yes, Ian, I think we've done a pretty good job on the share repurchases. And I think we certainly have taken into account what we know as the investor appetite in that area. We first have to complete the remainder of our current repurchase program at the 2nd or 1st December. At the end of the year, we will revisit our capital position, our earnings expectation for 2008, rating agency requirements and investor requirements. I want to get to the board, but given the current outlook we should have sufficient capital to satisfy all of these constituencies. We have said in the past that we are not greatly interested in acquisitions but I think that continues to be our position. We recognize the desire for proven capital management especially relates to share repurchases. So, we are definitely... we'll take it into consideration. And in terms of your question on premium to surplus I will just say that two things. One, the days of the 1.5 to 1 are over, I mean the cap rate agencies have changed their capital requirements greatly. The second thing is that in terms of comparison I just saw an A.M. Best sheet that showed that the some industry data and the average in the industry was 0.9 to 1. So I mean we are not really that at aligned, when we were kind of in line. And the third I think is when you are in a soft market premium to surplus tends to be a little bit lower than it is at other times because rating agencies charge capital on reserves and assets. And when the market in the first three years of a market slowdown, our premiums flatten out, reserves grow, I think also have grown about $5 billion over the last three years and assets growth. So you tend to under their sophisticated capital requirement... you tend to see for that period of time are lower than ongoing rate of premium to surplus. The market picked up again and became hard, you see exactly the opposite thing. So what I want to keep in mind is we are focusing our capital management, 0.9 to 1 isn't really aligned with the competition. The low levels you've seen in the industry are basis of how the capital models work in a soft market. But we are balanced to consideration of the constituency and we'll certainly take a hard look at year end. Ian Gutterman - Adage Capital: Okay, I totally understand my 1.5 to 1 isn't feasible anymore. Can you give me sort of a sense of what are new... I mean is 1 in a quarter feasible under the right market conditions or? John D. Finnegan - Chairman, President and Chief Executive Officer: What I... it depends on the market. What I would say is 0.9 to 1 is probably I should see by us in the industry where in the beginning of a soft market that most companies feel comfortable to be but also stocks... continuing to buyback stock. If the market hardened you would see that reverse. That's certainly not the ongoing level over the whole cycle. I mean for sure it's not that low. It's just that you see artificially low premium to surplus in a soft market artificially high, in a hard market mostly related to the relationship between premium and reserves. I think that's where you have to look. Now over time if the soft market continues you obliviously see a platonic of reserve growth and platonic of asset growth. You will see... you will see the premium to surplus sort of flatten out or come back up a little but I'll take a hard market to pick it up considerably. Ian Gutterman - Adage Capital: Okay. And looks like you're not suggesting that share purchase is inadequate, you don't lot is [ph]. I guess I just look at it, like you said what the industry being that low, usually part of the reason the market gets softer is because premium to surplus is that low and everyone feels that could have capital burning a hole in their pocket and they don't know what to do with it. So I guess that's why to me it feels 0.9 to 1 for the industry is to be honest an extra sign for the condition of the market. John D. Finnegan - Chairman, President and Chief Executive Officer: Because of the capacity issue you mean. Ian Gutterman - Adage Capital: Right, right. That's why it's kind of getting out there is anything new you are thinking about that might be the way to deploy capacity or is that what you see... that you think the industry needs to do to deploy capacity. So we don't get into the same cycle as in the past? John D. Finnegan - Chairman, President and Chief Executive Officer: We are focusing on executing in the niches we are in, focus on growing organically and we have taken into consideration the appetite of our investors, so for prudent capital management. Ian Gutterman - Adage Capital: Okay, thanks guys.

And we'll take our question from Peter Suisse [ph].

Hey guys good quarter. Just had a couple of follow ups. Just trying to learn little bit more about the situation in California and kind of what states we are in. The first one being... do you have any idea how many claims the industry has experienced so far? I know you said that you have experienced 25? John J. Degnan - Vice Chairman and Chief Administrative Officer: That was as of about 3 o'clock this afternoon. We have no idea what the industry is experiencing. We have seen the same market share data you have but without knowing where it is and which way it travels, we'd be wildly speculative to go beyond what we have said.

Got you. And then just trying to compare the little bit relative to the '03 on experience. Do you have any idea how many claims did the industry experience back in '03 and then also how many claims did you experience back in '03? John J. Degnan - Vice Chairman and Chief Administrative Officer: I don't have those numbers. John D. Finnegan - Chairman, President and Chief Executive Officer: I want to hit the same exact spot but I don't think that you can really make the comparison? John J. Degnan - Vice Chairman and Chief Administrative Officer: I'd echo what John said earlier. I would caution you against using that '03 experience as a starting point in the analysis here. Could turn out to be a different event. Michael O'Reilly - Vice Chairman and Chief Financial Officer: This is Mike O'Reilly. An awful lot of what's going to happen here will depend upon the wind direction and the velocity of the wind because you've got an environment were the brush is dry, and there hasn't been a fire here in these areas for many years. And so it could be quite flammable but if the wind basically sort of levels out... this thing could Peter out and not much happening. So I mean it's... and if you go look at the weather map, the weather channel and the what's on the news media you got to be careful as you look at it because one house could burn to the ground and next house next door is less standing. So it's really hard at this point to get a handle on it. Thomas F. Motamed - Vice Chairman and Chief Operating Officer: I amdelighted to see the CFO becoming a claims guy by the way.

And do you guys plan to update us during the quarter as you learn about what kind of losses you experienced? Michael O'Reilly - Vice Chairman and Chief Financial Officer: Well, I mean, we'll evaluate how this thing develops and we'll make an appropriate decision at that point. We... I think we always follow a pattern of keeping investors and analysts informed as to and eventually we thought made sense. And we will continue to do that here. But right now we can't commit to exactly what we're going to say what if anything because we don't know what's going to happen.

Okay, great. Thank you.

And Mr. Finnegan, there are no further questions. John D. Finnegan - Chairman, President and Chief Executive Officer: Okay. Well thank you very much for joining us tonight.

And that does conclude our conference for today. Thank you for your participation. Have a pleasant day. You may disconnect now.