Moody's has affirmed the A2 senior debt rating of Chubb Corporation, and the Aa2 insurance financial strength rating of its principal insurance subsidiaries, namely Federal Insurance Company and its affiliated pool members.

The outlook for the ratings has been changed to stable from negative.

Moody's said the rating affirmation and stable outlook reflect the company's strong underwriting performance and cash flows, as well as its improved risk-adjusted capitalization and moderating holding company financial leverage profile.

Moody's initiated the negative outlook in March 2004 on the basis of concerns regarding both observed past and potential future volatility arising out of the company's professional liability insurance segment, as well as the potential for continued drag from asbestos-related claim losses.

Moody's noted that, since then, Chubb has experienced a reduced level of adverse development from executive liability protection insurance such as directors and officers and errors & omissions coverages written in recent years.

The ratings agency said that this favourable trend, together with improved pricing fundamentals across most of its business lines, has contributed to robust core earnings and internal capital generation, which in turn have improved earnings coverage metrics and operational and financial leverage measures.