Is Chubb the Breakfast of Champions?

It's good to be king. Just ask Chubb, who along with Travelers and MetLife is currently atop the insurance heap. It's an enviable position they share with other financial giants such as Goldman Sachs and Morgan Stanley.

Chubb's second quarter earnings released yesterday were not only a chance to glorify its own position in the market, but an opportunity to trash those who are limping through the demolition derby, specifically American International Group. The insurance world according to Chubb: Bring in the tow truck and haul it off to the trash compactor.

"We compete against companies that are unsustainable except for government intervention," Chubb Chief Operating Officer John Degnan told analysts at the earnings conference. "If consumers are unlikely to buy a car built by the government, why would they want to buy an insurance policy (from it)?"

This variation on the old adage, "Would you buy a used car from this man?" is an obvious attempt to take away policyholders from one of AIG's remaining profitable businesses: high-net-worth customers who need insurance for their jewelry, fine arts and lakefront homes.

Chubb caters to the same wealthy end of the property and commercial insurance spectrum; its policies, while not cheap, are for people who want to be paid off and not bothered when the Ferrari is totaled or the mansion goes up in smoke.

Why is Chubb so angry at AIG and others like Hartford Financial that have taken TARP money? The answer could be that, as BNET Finance has reported, New York and Pennsylvania are investigating whether AIG is deliberately using federal bailout dollars to undercut the market. No charges have been filed yet, and may never be, but AIG has a reputation for undercutting other insurers, and using the taxpayers' credit card could make it easier.

Not that Chubb's hurting. Operating income, which is the yardstick to measure insurers, rose 6 percent in the second quarter. Chubb raised its full-year forecast and also said it would accelerate its share buyback program so as to complete it by the end of the year.

But dark clouds are looming on the horizon. Net written premiums declined in all three of Chubb's major units. Its commercial insurance unit, which insures businesses, was down 7 percent. And a survey by the Council of Insurance Agents and Brokers shows there's no sign of a better market for commercial insurers in the future. So Chubb would like nothing better than to see AIG and Hartford out of the picture once and for all.

And one way to do that is to buy their property casualty units for a low price. Chubb's already checked out Hartford. Could it be talking down the competition to lower the price?