Chubb Corp. said it has completed its deal with a private equityfirm, Stone Point Capital LLC, to launch a Bermuda-based reinsurer,investing $1.5 billion in the deal.

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The Warren, N.J.-based insurer said Harbor Point has provided$200 million in 6 percent convertible notes and warrants,representing approximately 16 percent of the total equity of thenew company.

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Chubb said it expects the transaction to result in a pre-taxgain of approximately $200 million, of which $168 million would berecognized in the fourth quarter of 2005 and $32 million would bedeferred.

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Under arrangements entered into with Harbor Point as part of thetransaction, Chubb said it will also receive cash payments over thenext two years. The amounts will be based on the amount ofreinsurance business placed through Chubb by Harbor Point duringthis transition period and the amount of Chubb business renewed byHarbor Point.

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Chubb expects to recognize this income in 2006 and 2007.

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Chubb's plan calls for the transfer of its ongoing business fromits reinsurance arm, Chubb Re, to the new venture, along withcertain related assets, including renewal rights effective Jan. 1,2006.

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Chubb Re will no longer engage directly in the assumedreinsurance business. Harbor Point, however, will have theright--for a transition period--to have Chubb front certainreinsurance business in cases where Harbor Point is unable tounderwrite that business because of the absence of necessaryregulatory licenses or approvals.

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Oldwick, N.J.-based A.M. Best Co., has assigned a financialstrength rating of "A-(Excellent)" and an issuer credit rating of"a" to Harbor Point, with a stable outlook.

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