Fill and Sign the Chubb Corporation Secgov Form

THE CHUBB CORPORATION ANNUAL INCENTIVE COMPENSATION PLAN (1996) 1. PURPOSE. The purpose of The Chubb Corporation Annual Incentive Compensation Plan (the “Plan”) is to provide The Chubb Corporation (the “Company”) and its subsidiaries with an effective means of attracting. retaining and motivating officers and other key employees and to provide them with incentives to enhance the growth and profitability of the Company. 2. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective as of January 1, 1996, subject to approval by the Shareholders of the Corporation. 3. ADMINISTRATION. The Plan shall be administered by the Organization & Compensation Committee (the “Committee”) of the Board of Directors of the Company. Subject to the provisions of the Plan, the Committee shall be authorized to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan and to make all other determinations necessary or advisable for the administration of the Plan. The determination of the Committee in the administration of the Plan, as described herein, shall be final and conclusive. 4. ELIGIBILITY. Incentive Compensation awards under the Plan for any fiscal year of the Company (“Fiscal Year”) may be granted to those key employees and officers (including officers who are directors) of the Company and its subsidiaries (“Participants”), who shall be selected by the Committee after consideration of management s recommendations. Subsidiaries shall mean any business entity in which the Company owns, directly or in directly, 50% or more of the total combined voting power of all classes of stock. 5. ANNUAL INCENTIVE POOL DETERMINATION. As soon as practicable either before or after the beginning of each Fiscal Year, the Committee shall designate a list of Participants for such Fiscal Year, designate target awards by salary grade or such other standard determined by the Committee and establish a target award pool, which sh~Al be the sum of target awards for all Participants. The Committee shall also determine target financial goals for the year which shall be based on the Company s combined loss and expense ratio (“combined ratio”) and net income, which is investment income arising from the property and casualty insurance business and underwriting profit or loss from that business, and a comparison of the combined ratio and return on equity with those of key competitors and construct a schedule around such goals that would result in the earning of from 25% to 200% of the target award pool depending upon what percentage or percentages of the financial goal or goals were achieved. As soon as practicable after the end of the Fiscal Year, the Committee shall determine the percentage of the target award pool available for payment based upon such schedule and after considering management s recommendations, if any, that the effect of unusual items on the financial results for such Fiscal Year be excluded from the calculations, provided, however, that no such adjustment in the calculations shall be applied to any participant determined by the Committee (i) to be a covered employee as defined in Section 162(m) of the Internal Revenue Code for the preceding Fiscal Year or (ii) likely to be such a covered employee for the current or next following Fiscal Year (hereafter referred to as a “covered employee”). 6. AWARD DETERMINATION. As soon as practicable after the end of the Fiscal Year, the Committee shall approve incentive award payments to Participants which are based both on the size of the target award pool available and upon managements assessment of the Participants individual performance during the Fiscal Year but in no event may the Committee increase an award to a participant deemed to be a covered employee over such amounts payable based on the objective criteria established at the outset of the Fiscal Year for which the award is made, nor shall the maximum award payable to any such covered employee exceed $2,500,000. The Committee shall have no obligation to pay out all of the award pool for a Fiscal Year, but in no event can the total amount paid exceed 200% of the target award pool for such Fiscal Year. Except as provided in Section 8 with respect to deferred awards, Participants must be employed by the Company or one of its subsidiaries as of the payment date under Section 7 to be eligible for award payments, provided, that if the Participants employment is terminated prior to the payment date by reason of death, retirement on or after the Participants Normal Retirement Date under the Company’s Pension Plan, disability (as defined in such Pension Plan), or any other reason with the consent of the Committee, the Committee, in its sole discretion, may provide for an award payment to that Participant or the Participants Designated Beneficiary, if applicable. 7. FORM OF PAYMENT. All awards approved by the Committee for payment, unless deferred under Section 8, shall be paid in cash as soon as practicable after the end of the Fiscal Year. 8. DEFERRALS. (a) From time to time, Participants may be offered the opportunity to defer receipt of all or a portion of their award, if any. Whether a deferral opportunity shall be offered for awards granted hereunder for a Fiscal Year shall be determined by the Committee in its sole discretion provided that any such opportunity, if made available with respect to awards for a Fiscal Year, shall be offered under uniform rules applicable to all Participants. Any election to defer shall be made prior to the beginning of the award year except for the first year the Plan is in effect. Deferrals must be for increments of 10% of the potential award which may be granted to a Participant. (b) Deferred awards are not forfeitable and will be paid after termination of employment. Deferred awards payable under this Plan shall not be funded but will constitute the general obligations of the Company. (c) At the same time the Participant elects to defer all or a portion of an award, the Participant shall also elect whether the deferred funds shall be credited with an interest equivalent amount or shall be allocated to an insured income benefit program. Deferred awards not allocated to an insured income benefit program shall receive a quarterly interest equivalent up to the time of final payment at a rate set from time to time by the Committee. The sum of the award plus all interest equivalents shall be paid out in a lump sum or in up to fifteen installments as specified by the Participant at the same time the deferral election was filed. (d) The Committee may approve for early payment all or a portion of a Participants deferred awards in case of financial hardship, as determined by the Committee. (e) If a Participants employment is terminated by reason of death, retirement on or after the Participants Normal Retirement Date under the Company’s Pension Plan, disability (as defined in such Pension Plan), or any other reason with the consent of the Committee, deferred awards will be paid out in a lump sum or in installments as designated by the Participant on the deferral election form, provided, however, the Committee shall have the ability to accelerate installment s in the event of disability and provided further, that in the event of the Participants death, the Designated Beneficiary may request that the Committee approve that payments due hereunder with respect to such Participant shall be made under a method different than the method designated by the Participant. If employment is terminated for any other reason, the Participant shall receive a lump sum distribution of such Participants deferred awards. (f) The Committee shall have the right to terminate or limit the right of Participants to continue the previously elected deferral of an award for any Fiscal Year if the Committee in its, sole discretion shall determine at any time that such continued deferral has become inadvisable because of changes in the Federal tax laws or any other circumstances which, in the judgment of the Committee, jeopardize the ability of the Company to appropriately finance the deferral of such award. In such event, all affected amounts, including such amounts previously credited as interest equivalents (or, if such affected amount had previously been deferred and allocated to an insured income benefit program, the amount deferred plus the interest equivalent amount that would have been credited on such deferred amount had it not been allocated to an insured income benefit program) shall be paid to the Participant as soon as practicable after the Committee’s determination. 9. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are applicable to this Plan: (a) Except in the event of the death of a Participant, the rights and interests of a Participant under the Plan may not be assigned, encumbered or transferred. (b) No employee or other person shall have any claim or right to be granted an award under the Plan. Neither the Plan nor any action taken thereunder shall be construed as giving any employee or other person any right to be retained in the employ of the Company. (c) The Company shall have the right to deduct from all payments made under the Plan any taxes required by law to be withheld with respect to such payments. (d) The Plan shall be construed in accordance with and governed by the laws of the State of New York, (e) Each Participant shall designate in a manner determined by the Committee a beneficiary (the “Designated Beneficiary”) to receive payments due hereunder in the event of such Participants death. If no Designated Beneficiary survives the Participant, it shall be the surviving spouse of the Participant or, if there is no surviving spouse, it shall be the estate of the Participant.10. TERMINATION. The Board of Directors of the Company may amend, suspend, or terminate any or all provisions of the Plan at any time, provided that no such amendment, suspension or termination shall adversely affect, without the Participants consent, any awards previously granted to them. 11. OTHER PLANS OR PAYMENTS. Nothing in this Plan shall be construed as limiting the authority of the Committee, the Board of Directors, the Company or any subsidiary, to establish any other deferred compensation plan or as in any way limiting their authority to pay bonuses or other supplemental compensation to any persons employed by the Company or a subsidiary, whether or not such person is a Participant in this Plan and regardless of how the amount of such compensation or bonus is determined. The Chubb Corporation 3/12/96