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WARREN, N.J.-Chubb Corp. will become a highly specialized property/casualty company with the sale of its life insurance operations for $875 million, said a company spokesman.

Although the decision to use much of the proceeds to repurchase stock likely will make shareholders happy, the transaction will have no direct impact on Chubb's P/C operations, the company and observers say.

Chubb last week said it had signed a definitive agreement to sell its Chubb Life Insurance Co. of America unit to Greensboro, N.C.-based Jefferson-Pilot Corp. for $875 million in cash.

The company also is continuing to explore its options on real estate, the spokesman said in response to reports that a sale of these operations is imminent as well.

Chubb said last year it planned to evaluate its options for its life operation and its real estate unit, Bellemead Development Corp., including a possible sale.

Dean O'Hare, Chubb Corp.'s chairman and chief executive officer, said in a statement that the company's first goal in reviewing its strategic options for Chubb Life "was to enhance shareholder value, and the combination of the sale of Chubb Life and the redeployment of capital into an accelerated share repurchase program will achieve this."

It also wanted to complete the process as quickly as possible to minimize the period of uncertainty for the life operation's employees and agents, "and I believe that we have accomplished this as well," said Mr. O'Hare.

Michael Smith, an analyst with Salomon Brothers in New York, said he had expected Chubb would use proceeds of the sale for additional international investments in its P/C operations. But, in light of current market conditions, Chubb has concluded "the best use of the capital is to give it back to shareholders."

Weston M. Hicks, an analyst with Sanford Bernstein & Co. in New York, said, "I think that Chubb has been in the process for the last six months or so of forming a strategy to concentrate on its global P/C business, and I think once you strip away the life and real estate operations, what you see is a very fantastic company in terms of its performance."

Mr. Hicks said the combination of a substantial portion of the proceeds from the life operation as well as from the sale of all or part of its real estate operations will improve the company's overall return from the 12% to 13% range to about 16% in 1998, "and at that point it will be a higher-return company with virtually no financial leverage, which gives it enormous financial flexibility, so it's a good thing."

"I don't think it will have much operational impact" on its P/C business, he said, though "it does strengthen the company to the extent they can redeploy capital out of low-return businesses."

Chubb made a "conscious decision to redirect capital where it gets the best returns," said Michael A. Lewis, first vp with Dean Witter Reynolds in New York. The life and real estate operations were underperforming, and long-term, "this move will improve Chubb's overall return on equity."

If proceeds are used to repurchase stock, the real benefit will be its impact on the stock's price, said Matthew Coyle, an associate director for Standard & Poor's Corp., also.

On Tuesday, the day after the sale was announced, Chubb closed at $58.88, up 88 cents. On Friday, it closed at $58.63.