Q1 2020 Earnings Call
And event specialist will join you shortly.
[noise].
If you're a speaker all presenter. Please notify the event specialist you may be off to provide a confirmation code.
[noise].
Because name or the title of your event.
<unk>.
These be prepared to provide that information.
Once you have provided that information you'll be placed on hold with music well placed into your event.
[noise] Hello.
Welcome to the event center.
An event specialist will join you shortly.
[noise].
If you're a speaker all presenter please notify the event.
You may be off to provide a confirmation code.
Because name.
Well the title of your event.
[laughter].
Please be prepared to provide that information.
Once you have provided that information you'll be placed on hold with music well placed into your event.
[music].
Hello, and welcome to the event center.
And event specialist will join you shortly.
[noise].
If you're a speaker all presenter please notify the.
Specialist you may be off to provide a confirmation code speak of name or the title of your event.
[noise].
Please be prepared to provide that information.
<unk>.
Once you have provided that information you will be placed on hold with music.
Well placed into your event.
[music].
Hello, and welcome to the event center.
Event specialist will join you shortly.
<unk>.
If you're a speaker all presenter.
Please notify the.
Specialist you may be off to provide a confirmation code speak of name.
Well the title of your event.
Please be prepared to provide that information.
Once you have provided that information you'll be placed on hold with music well placed into your event.
[music].
[noise] Hello, and welcome to the event center and event specialist will join you shortly.
Great.
If you're a speaker all presenter please notify the event.
You may be off to provide a confirmation code.
Because name or the title of your event.
[noise].
Please be prepared to provide that information. Once you have provided that information you'll be placed on hold with music well placed into your event.
Okay.
[music].
Hello, and welcome to the event center.
And event specialist will join you shortly.
[laughter].
If you're a speaker all presenter please notify the event.
You may be off to provide a confirmation code.
Because name or the title of your event.
[laughter].
Please be prepared to provide that information. Once you have provided that information you'll be placed on hold with music or placed into your event.
[music].
Hello, and welcome to the event center.
Event specialist will join you shortly.
[laughter].
If you're a speaker all presenter please notify the event.
You may be off to provide a company.
I'd like to join.
Hello.
[noise].
Hello.
Oh.
Yeah.
My luck designed to have limited earnings call. Please.
[noise] [noise].
Okay and year personally.
Selling.
David Brown.
David D.A.B.I.E.
Well the R.W.
And what company or you want.
Hi.
Hi, E. on a.
Hey.
[noise].
Our.
Yes.
Is there anything after a.
ER.
No.
Yeah.
All right I'll get to.
And.
Thank you.
You're welcome.
[noise].
Chris Greenco under your current accident year underwriting income growth with your reduced benefit from the run off of that 19 crop insurance year.
You recall lighting things a difficult here for agriculture, while 18 was an excellent.
Booking tangible book value per share declined five and a half in southern half percent, respectively for the quarter and fill up more to say about investment income book value.
Prior period the ball.
Turning to grow from the rate environment.
The net premiums grew 8.9 on a problem.
9.3% in constant dollars.
Commercial PMC pricing environment June you'd get from across the globe.
We secure greater market share as we achieved <unk> right to exposure and more lines of business.
It's necessary firming continued into April.
Overall rates increased in North America, commercial which includes both major accounts in specialty as well as middle market in small commercial like tender and a half percent.
Business was up 4700, and after second quarter and renewal retention was 95% audit premium basis.
Our North America commercial PNC business had a strong quarter with net premiums growth of over 10%.
A major accounts in specialty commercial excluding AG premiums grew about 900, a half percent.
Major account retail growth of seven new units wholesale growth of over 19.
In terms of rate increases rates for major accounts were up 13%.
And in Westchester and Bermuda, they were up 16, and 42% respectively.
Turning toward you watch middle market in small commercial division premiums grew 11% overall.
The middle market up nine in small commercial up over 40%.
Renewal retention anymore.
94, and a half.
Middle market pricing was up over 6.5% that excluding workers club it was up over so.
You know, our North America personal lines business that premiums written in the quarter were up 4.8% and retention remained very strong 98% audit premium basis.
In our international General insurance operations growth remained strong with net premiums written up 10% in constant dollar and FX brand had a negative impact of about 1.3 points.
Net premiums were London wholesale business grew over 27%.
While retail division was up over eating the half there so.
Growth in our international retail business was led by Latin America.
It was up 13.
Europe in the UK had growth of 9.7 to 9.1, respectively.
And overall rates in our international retail business were up 8% and 18% North London wholesale.
Our international life insurance business had a strong quarter net written premiums up nearly 30% in constant dollar.
John Keogh, John would book of Paul Krump, one when we sort of pega can provide further color on the quarter, including current market conditions and pricing trends.
But I think in history and from another time.
Is important is to recognize the underlying strength and momentum of our company.
We entered this moment.
Turning to the current environment. The Kobin 19 pandemic consequent economic crisis, we'll of course impact job.
Our growth momentum, particularly in our commercial PNC business globally.
Continued into April and we continued to experience improved great people exposure.
As we go forward offsetting that will be a meaningful impact to growth from the health and economic crisis as exposures and important areas shrink for a time with the impact varied by country.
This includes consumer related lives for example, travel insurance and age discretionary purchases automobile insurance.
Commercial lines, where exposures are reduced while businesses are closed.
As they reopen and or diminish or simply go out of business.
Small commercial businesses in aggregate will be more impacted the media, which will be more impacted than large companies, but it will vary substantially by industry.
Credit related products, such as trade credit surety and other lines such as workers comp premium revenue will be impacted by reduced exposures.
As you know, we do not give forward guidance and in this case the degree of revenue impact is simply unknowable.
The other hand.
So I said, we are there will continue to benefit in terms of growth from improved technical conditions as many insurance companies take actions to reduce exposures or improve their rate to exposure to correct for inadequate underwriting.
This will be an earnings events the job it will not threaten our balance sheet.
Operating earnings will be impacted predominantly on the liability side and the balance sheet from increased insurance claims, though the asset side will likely be impacted as well from increased asset impairments.
In addition.
As I just mentioned earnings will be impacted by a reduction in premium revenues for a period of time.
In sum from what we know now this will be a manageable like event. However from an exposure, we really don't discreetly price for so its impact is additive to our normal projected loss exposure.
In a sense, it's like what terrorism exposure was before 911.
We have a very strong balance sheet, our capital and liquidity position are robust and Chubb and we'll continue to operate at a high level and emerge strong or stronger.
Again insurance I was an important role to play in society and in the economy, We're shouldering our share of responsibility, while doing our job to support our employees.
Customers and our business partners, we have been quite clear about our priorities and it shows in our response.
First to the extent possible, we have taken care of our 33000 people around the world.
Ever to keep them six through aggressive work from home protocols.
Provided them degree of peace of mind, knowing their jobs and benefits or secure during the health crisis, we've been no layoff plage.
Second.
We have remained consistent with how we take care of our customers distribution partners doing what we continue to support their needs.
We are operating around the globe as a normal company during abnormal times.
Hi, I'm, so proud I am absolutely grateful for how my colleagues are performing everyday as a group.
From the smallest to the largest unit from the biggest to the smallest country.
Reaches focused on delivering on our mission for internal operations, the underwriting sales claims marketing and finance, it's really quite remarkable.
We're extending payment terms to commercial customers recognizing their cash flow pressures.
Lighting, a premium credit for auto policy holders in the U.S. recognizing their reduced exposures are.
We're supporting our U.S. small business clients with premium reductions for their reduced exposures.
Supporting our small commercial clients by providing healthcare workers.
First responders gift cards redeemable at our customers businesses.
Lastly, as a corporate citizen are contributing to the immediate emergency response today, while supporting the future tomorrow.
Our commitment of 10 million to pandemic relief efforts globally is being directed to a range of organizations that provide essential resources immediately in areas facing the most acute need.
This includes providing emergency medical equipment and supplies to health care facilities, and helping community food banks support those who are hungry vulnerable.
Including so many who become unemployed as a result of the pandemic. This is only the first chapter.
We move into the recovery phase the jump foundation will commit substantial additional funds in some our country. Our company is very strong.
Alan sheet is in good shape, we're operating well, while I see pressure on revenue and earnings in the short term I see much opportunity for us in the future given all of our capabilities I am comfortable juggler, whether these difficult times and emerge stronger from this challenge with that.
I'll turn the call over to fill and then we'll be back to take your questions.
Thank you Evan.
I want to begin with a few words on our financial position.
Which remains exceptionally strong.
Our balance sheet includes.
Double a rated investment portfolio with a relatively short duration [laughter] and at the start rid of approach to our loss reserves.
We have over 67 billion total capital.
Which as we entered this period is very strong stemming from superior operating performance.
Or access to liquidity on a global basis is excellent and unimpaired.
Operating operating cash flow remains quite strong and was 1.7 billion for the quarter.
Net realized and unrealized losses for the quarter of 3.7 billion for tax included 2.2 billion from an investment portfolio, which resulted primarily from widening credit spreads in the investment grade and high yield bond portfolio through March 30 Onest.
Even after considering the valuation adjustments noted our portfolio remain in an overall.
Gain position through the quarter on it.
Since that time credit markets have recovered and liquidity has improved as a result of extraordinary actions taken by the.
In response to the code with my team and then.
The portfolio Mark has improved by approximately 1.7 billion pretax who this Monday.
We also had a mark to market loss on are variable annuity reinsurance portfolio of 560 million.
This was primarily due to negative equity returns on an increase in implied volatility.
Dan This is purely a mark to market adjustment required because the transactions are deemed to be derivatives for accounting purposes.
Not indicate a reduction in cash flows from our reinsurance treaties for the quarter.
The results are in line with our expectations given these market conditions.
Finally realized and unrealized losses included 896 million after tax losses from FX related to our net access exposure to foreign currency.
These represent a point in time, mark to market valuation adjustment and do not affect the capital position of our international operating units.
As we noted the press release.
Remarks.
Mark market price driven based in the last thing every quarter in a moment in time, we've read there largely trulicity and will accrete back to book value overtime.
Adjusted net investment income for the quarter was 800 times 93 million pretax and was within our guidance range.
In March we engaged on the margin in several tactical adjustments to the portfolio.
Purchase of modest amounts of high quality equities.
And modestly increased or exposure to investment grade corporate bonds.
Well there are a number of factors that impact the variability investment.
That's our quarterly run rate to remain in the range of 885 to 895 million.
Net catastrophe losses for the quarter were 237 million pretax were 199 million after tax.
Including 224 million from global weather related events, and 13 million so far from coal that 19, which has been classified as an ongoing catastrophe.
Well there was no significant impact on core operating income in the first quarter related to cold admitted to the company anticipates that this global catastrophe or that will have an impact on revenue.
As well as net and core operating income in the second quarter and potentially future quarters. As a result for the decrease in insurance claims due to both depend benefits and recessionary economic conditions.
Well the constant dollar basis net loss reserves increased 363 million in the quarter and include the impact of catastrophe loss payments.
Favorable prior period development and crop insurance payments in the quarter.
On a reported basis the paid to occurred ratio was 95%.
After adjusting for these items noted above the pay to incurred ratio was 88%.
We had favorable prior period development in the quarter of 118 million pretax or 94 million after tax.
The favorable development is split approximately 20% and long tail lines, principally from accident years 2016 and prior.
And 72% in short tail lines.
Last years, they were favorable development of 200 core loan included 61 million of positive.
<unk> agriculture segment, resulting from stronger than unexpected results from the 2018 property here.
As we said at your end based on a difficult 2019 crop year. This level of development would not be occur in the first quarter of 2020.
Among the capital related actions in the quarter, we return 666 million to shareholders.
Putting 340 living in derivatives and 326 million in sharing purchases at at an average price of $142.67 per share.
Given the current economic environment.
And to preserve capital for both risk and opportunity.
The company has suspended further share repurchases indefinitely.
Are annualized core operating our when you're in a quarter was 9.4%.
And our core operating return on tangible equity was 15.1%.
Our core operating effective tax rate for the quarter was 16.3%.
Continue to expect our annual core operating effective petri to be in the range of 14% to 16%.
I'll turn to call back to Helen I mean could count so it's either [laughter] okay.
Thank you at this point we're happy.
[noise] [noise] signal by pressing star one on your telephone keypad.
If you were using your speaker phone. Please make sure that your main function is turned off till your signal to retire [laughter].
And with that we will take our first question from Michael Phillips was Morgan Stanley.
Oh, Thank you in the morning, Buddy. Thank you everybody thinks employee requirements I guess the first question is that'd be on the future impact on the wall. So.
<unk>.
Obviously without giving numbers, but maybe just where you feel troubles most exposed to that from I guess, a geographic and coverage perspective.
[noise].
I'm not gonna give any specifics in that there'll be it'll come from a variety of areas as we imagine right now.
And.
There'll be a the reason we didn't put up numbers in the first quarter is because we're going to do it in a thoughtful way based on.
Claims that come in that are analyzed and reported it and then.
We're able to have a framework to project I'd be annoying with that in a thoughtful light as well, but claims will come from travel insurance an A.N.H., we'll have we'll have business interruption losses.
There, we purposely provided coverage.
As opposed to where we feel the vast majority where we did not provide coverage will habit from credit related that is surely and trade credit and and maybe political risk who knows workers comfortable produce loss and so I'm sure.
And so you know kind of gives you a a sense and it'll be it'll be you know I think it'd be pretty broad based because it's it's created exposures for clients for the industries and the economy's broadly and it over you know geography, well you know over half art.
Businesses in the United States, So I expect all things being equal.
The since our greatest exposure is in the U.S. you know by territory. The greatest in a model also come out of the U.S. and I hope that helps you.
Oh, Yeah. It does does thank you very much you know I know Avenue, you'll be really actively involved and and test scores and things that are happening during the U.S. and.
I guess no clearly all the pressure from states on the Guy and stayed some numbers comp and you know big restaurants that are in desert, tromp and and things like that all these different pressures.
He was you know not what we're looking for your one expectation, but since your thoughts on how it's all kind of shakes out you know different scenarios on how the pressure on insurance kinda unfolds and and what to expect maybe a a good thing kind of shapes up.
You know.
The insurance industry it today.
Is an important part of the financial plumbing.
Of our economy.
U.S. and frankly, it's part of this financial plumbing, it's critical global.
The insurance industry I think is performing quite well I think will perform very well you're meeting.
Their obligations.
I know our obligations.
When it comes to.
Business interruption.
There is.
Varies activity that I put into two categories. One is on the political side, where there is talk about retroactively.
Imposing cover on insurers for something that they didn't cover and didn't charge a premium <unk> retroactively changing contract.
And increasing our exposure.
You know I think <unk> that's.
Unnecessary harm I would do great damage it would it would damage or destroy the insurance industry.
In a terrible way.
It would simply take money from one to give to another.
Who does that serve.
Frankly, it's unconstitutional.
And we are a constitutional democracy and preservation of that and the certainty of that in such on certain times is paramount.
So I start with that secondly.
The insurance industry for the most part except for those customers, who discreetly purchased it.
B.I. insurance doesn't cover <unk>.
<unk> 19, it covers and requires direct physical laws to a property.
The regulators who've approve these forms because we're highly regulated confirming confirm that themselves, but it's not contemplated no lawyers and then the trial bar would tempted tortured the language on standard industry forms I'm tried to prove.
Something exists that actually doesn't exist and tried to twisty intent wouldn't <unk> intent is very clear and meat industry will fight this tooth and nail we will pay what we Oh and finally, but I'd say his business interruption insurance actually we should.
Remember is very good value for money because what it does cover we pay out as an industry roughly from what we can estimate about 70 cents on the dollar and every business interrupt for every business interruption dollar a premium we collect any claims and you know that's pretty.
Good value for money. So thank you for the clustering.
I think a lot of unappreciative.
Well.
And we will take our next question.
All right now.
Good.
Hi that morning, and then.
Yeah.
<unk>.
So internationally Hmm.
The language typically follow the standard language with any <unk> I got you can't imagine that you could be on business interruption <unk>.
On should be thank bouncing definitely that the same <unk> bye.
By internationally as well as.
Limited to within the wall.
Yes, a lease.
Two comments first internationally.
It follows the same.
Pattern generally which is it requires direct physical loss to property as a trigger for B. I.
And and number one and then number two.
The exceptions are to that for job are where we purposely extended cover.
Different clients in different industries, and purposely kept on the exposure and and in those cases, it's clearly defined.
Okay, Thanks, and that my fucking <unk>.
San Diego buyback indefinitely, and the language and you have to prepare them occupied your class of any kind of it should be that you know team.
Economic uncertainty and while it just having capital flexibility evaluate 18 on the fact quite dancing out the insurance paid coming off of it <unk>. So when you get kind of provided.
In terms of finding a buyback my you'd think about it had any more capital.
No the potential apart from M. and I hear given that you know five meetings are much more attractive.
You know a lease it.
When do you look at the historic and let's just look at this from a big picture perspective.
We are in the worst economic.
Event.
We have faced as a nation and globally.
Since the great depression.
The economy is shut down.
The opening of the economy is going to take time, and it's not going to happen in a smooth way and no one knows for sure this shape or size or duration.
No one knows with any certainty.
And.
Frankly to be buying back stock at that time.
To me is so clearly unwise.
And the fiduciary responsibility.
As to our customers are shareholders our employees.
<unk> capital strength of balance sheet.
Capital.
Liquidity or king in this environment I.
And those are those are attributes and strength you can have enough of and.
Very fundamental very basic.
And when there is visibility and there is certain key.
And we all have a better sense.
Then we we'll reassess.
Okay. That's my phone thanks for the car.
You're welcome.
I mean I'll take our next question from.
Hi.
Okay.
Good morning thing to the call. So <unk> first question I was wondering if you could talk about how.
We might see a.
Fundamental changing the perception I.
We can sort of hard and self markets is happening.
Underlined seamless change.
I I can't really hear what you're saying can you speak up <unk>.
Oh, sorry about that already because we're on.
The line right now yeah.
My apologies hopefully that's better.
You could talk about where you see the the perception of risk changing in the in insurance industry, given the current environment, where where do we see underwriters likely changing how they do underwriting.
We did you risk.
Concentrations and such.
Yeah, you know.
First of all.
We're asking the question right now.
That is.
Asking about what do you think are the results of the wildfire when we're in the middle of the fire.
This event is unfolding.
And I I would urge you to.
Think that why it's not like it has occurred and now we're looking back or in the middle of it.
And so some of the implications it's too early to tell don't know, but the one thing I will say perception of risk.
As.
Always occurs when a new peril.
Readers or Ted from the.
More academic to the actual it has a powerful one back and impacts perception of risk.
And in this case the last time, we had that was really terrorism.
Now in this case, we will go through.
In in a similar exercise in some ways underwriters will it'll vary by company, whether they actually I'd considered pandemic in their E.R. Ram modeling, which we do or or had not and really examine concentrations and how it impacts.
Outside to the balance sheet and then by the way how will you modeled on what the actual looks like I'll always different there's always basis risk and and reality is is is always different than the laboratory.
And this no different but this is a parallel.
The industry really didn't discreetly charge for.
It's a at your peril. Good that has no bounds in terms of geography nowhere time, so it's a very different kind of cat.
And.
In a practical sense infinite a l.
So it will impact by the way.
No doubt in my mind.
Better underwriters had better control over the exposures.
And underwriters, who were maybe not as good.
We'll have many surprises that will emerge.
Time will tell and we'll see that as this event unfolds.
I hope that helps.
No that that's great. My second question <unk> focus very much on the business interruption <unk>. The political was can you speak to how that may differ outside new routes.
Just simply the basic sometimes you just don't know how extensively.
Overseas and the other political situation with different.
Yeah the.
Overseas you know we're darker.
In in any one country Chubb, there's not a large middle market or small commercial writer, it's a business were growing and.
And then most every jurisdiction no different than the United States.
Small commercial and middle market customers cut standard industry forms providing coverage in their country.
They require direct physical laws.
Most countries that I know of it here that that where there's.
Significant concentration of exposure for the industry adhere to the rule of law.
Their forms are pretty darn clear.
Large commercial customers.
Business interruption insurance is typically on a more manuscript basis.
And so each customers forms speak to a large degree for themselves I had them.
And then each jurisdiction there'll be adjudicated based on the word ends as as they were drafted.
Thank you very much.
And frankly, Paul per day to day, I feel more stability outside the United States on the regulatory.
Illegal front, but I do.
The United States the irony.
Absolutely.
And our next question all come from my experience.
No.
Good morning.
First question.
You feel the corporate bosses bill impact.
Very insurance cover and you'll get some help from their insurance partners.
You know that's good that's specific to each reinsurance cover it's very fast specific will say.
Okay.
The next question if I looked at the North America commercial segments, and and I I heard your commentary about.
Those are in pricing being you know, 10% I think plus.
I'm looking at gross but opinions in a segment of growing up a lesser a 6%.
As there is.
Exposure of shrinking in the North America commercial second trying to understand the dynamics there.
North America commercial.
Like 90%.
Okay. So I don't know, what you're saying, so still let 'em in less than the cabinet.
All <unk> all mittens small group you can see.
Double digit large account grew a little slower.
And last year, we rode a one off transaction related to or two one off transactions related to wildfire last year, but didn't repeat this year.
Okay got it so maybe some some <unk> some noise in there but underlying I'd.
Like it's like really strong growth.
Okay I'll just keep on quick one in you know given you announced no no lay off policy for your belt value of employees and and they'll be top line pressure shall we expect that kind of material spike and the expense ratio in two q.
Nope.
I think it that's as far as I'll go on forward guidance, because I don't give those dozens but nope.
Suddenly okay. There next question.
[noise] learning so on the call and then you're <unk>, you reported $13 million to test with two Boston's related to cope with 19, then you made the statement, saying this will be tracked as a separate ongoing catastrophic events.
So, but it's clear that that's going to be losses, and what I've been doing on cure a reputable and losses related to this is the tracking they're going to provide you know give us color on both.
And then maybe you can dump tailback into the accounting geography of your announced premium reduction.
Programs, you know in the interim you a small business to personal lines et cetera.
Yeah, well I'm not going to give you much satisfaction on a question, but [laughter] the good the law the love.
But the last.
We'll be track.
Okay, you're doing your job the the last part.
We'll be tractors parted cat.
And and that's a report is caught the revenue reduction from exposures et cetera. Those will just come out in our publishing numbers and we'll give you as much color is we can around it as we understand it or no. It.
We don't see it yet.
But we know what's coming you can't have an account I mean, it's if Tom and stuff.
Can have an economy shut down and and and and exposures are shrinking and premium is is is a function of rate people exposure. So.
Oh, just them pretty basic there.
And that'll just you know be on a public spaces, but what we call his cat and an assigned to <unk> number is too.
Growl the losses.
And distinguish them from this for the cat event from.
Of what we would think is the underlying sorta runrate at the time.
Got it I had to drive.
I know that rotter, but like.
I gave you a framework and I think that that that'll help ya.
I I understand and I do appreciate it so I guess my second question.
You know.
The investment market and it's been cleverly phone into chaos and so I was curious if you could comment one and I know you. Yeah. I know you guys did provide some color and the opening comments, but just some additional color around all your approach to investing that's going to change and then maybe also.
Dovetail and then the life insurance business, because a lot of that businesses spread dates business and with interest rates at near zero I got to imagine that the outlook for those type of business is under a great deal after us.
[noise] remember I'll, just stamps or the life insurance part quickly for you.
Our life business is not in the United States in Asia, It's savings and protection related and very strongly protection related and the interest rate environment is is quite different it's and.
And so and the the minimum guarantees you provide are extremely low so.
And you can see we we publish it to you our earnings on the international likes distance or a pretty good grew nicely.
On the investment portfolio I'm going to ask him boroughs, our chief investment officer.
To give you a little more color, but fundamentally the the changes we are making in investment.
Activity are tactical.
And not strategic and the fundamentals remained in place Tim you're on.
Yeah. Thanks.
Maybe put on context around is.
I just watched that said that there.
Markets as then.
I think very impressive it's been a large.
Store.
Including the purchase of corporate bonds, both in the investment in the high yield sectors.
I guess it one way you might think about our portfolio is that this AD is buying for supporting with financing over 80% of what we so I think in that regard.
Yeah.
I still mentioned this commentary we have made a few tactical adjustments to our portfolio.
I think this that vantage of dislocations that occurred.
March was liquidity and that includes in corporate bonds and athletes.
I haven't mention overall I think that there's the remains too much uncertainty on how the virus will for for us and how quickly the economy recover to make any significant moves off our current allocation.
Right Oh, thank you.
Oh.
Yes.
<unk>.
[noise] wire shields.
Yeah.
Running off.
<unk>.
I think very legitimate opposition to changing the definition of business interruption exposure and it seems like a lot less.
Turn over expanding presumption that <unk> within workers compensation is that a fair read and.
A week like that different in attitudes with it.
Say that again my or the the second part.
Well repeat the question for me.
Okay.
There's a lot of I think completely appropriate opposition to vector actively changing the exposure on business interruption Oh.
But I'm not hearing that much puts back from insurance companies about the fact that workers compensation presumptions are changing a lot of the state and I understand the sort of emotional components of that but from economic standpoint.
How are you thinking about that change and it goes there.
Yeah my hair.
A very bright lighting distinction that should not confuse anyone.
Business interruption insurance the the the not the regulatory the the political.
Activity around it where there are those who are suggesting to retroactively change contract.
And add coverage that was never contemplated nor charged for.
Is very different than the workers comp, where I think you're referring to healthcare workers and first responders, where there is the notion of presumption that you've got the virus on the job that is not a change of contract.
That is something perfectly within the per view, depending on the state of the regulators I'm, the legislator legislatures and and and so that's within that's within legal bounds to do that.
And so very very different and and I I wouldn't confuse the two.
And by the way it varies by jurisdiction. Some jurisdictions right now have all the long said that data medical worker for instance, who can tracks and illness is presumed to have occurred on the job, whereas in in other end for any other professions.
It's a it's it's construed to be a general illness, you could've gotten anywhere and so it's not job related so worker's comp is very different in that regard.
Okay, I think you bet really help.
Different.
The next one here.
Yeah.
[noise], Yeah phone things I've been so I'm, just curious understand the implications pork spayed, Richard going forward it'd be thinking in any impact.
On pricing I'm going for you know be it you know, we'll we'll company locks up a little bit on pricing given the economic strain or he's going to go the other way given <unk> increasing its those are.
I think that the industry is has woken up.
Rating to exposure.
In the last year in particular.
Last year and a half.
And and understands.
Generally the need to get paid for properly for the exposures take on I don't see that trend changing and and I think this is that it's very likely the.
More than very likely I think this event will be the largest event.
Insurance history.
Hmm.
When you add it all up those asset side and liability side of the balance sheet and I think that just raises the specter of risk.
And and the notion of the of managing exposure.
I think it'll just put a point on getting the right week to exposure.
Well I think that absolutely continues.
Great. Thanks, and then the second question just on the business interruption is it possible to give us a a percentage a number of your policies that helps you carry a virus dogs, maybe some perspective on wouldn't typical kind of sublimit on what is when it's it's typically pretty heavily subliminally.
No, Brian I'm, not going into that level of detail and.
But.
What is very clear the vast vast majority of our policies.
Require direct physical loss.
And then the sub limits vary by whether it's in a major account or it's a middle market or it's a small commercial client it really varies and on both what we offered in what they bought.
Because we offer different options.
<unk>.
Right.
You're welcome.
And next.
Oh.
<unk>.
[noise]. Thanks. Thanks, Good morning, Adam just hoping to get your outlook on you know and other management liability wind you meant oh good and.
You know likely lawsuits alleging misleading disclosure disclosures in other things really the the code and I mean, how how big of an issue do you think this is for the industry.
And then per job in particular.
You know.
Who knows so I'm not gonna overly speculate about God and.
It's just but out of every event.
And every event creates you know trial bar ambulance chasing drive by shooting where they get most of the money and the the suppose it agreed to good very little.
I have no doubt that there will be covert related D.N. own sue related good price drop and disclosure et cetera, and frankly.
It is it is frivolous.
It is an unnecessary tax on on business and society at this point. It is a waste of time in terms of both resource and time and money.
On Congress audit granted immunity to business in some form.
Against that kind of activity that is so counterproductive enriches one industry at the expensive Ben economy that is trying to <unk>.
All stock's dropped broadly the code the 19 was no one's fall.
And then Foreseeability of it no. One is is no one has that kind of that kind of vision.
And so you know there's still the notion of buyer beware as for basic things.
In my mind, that's something that we ought to deal with and I'm glad you ask that question.
No I've not great. Appreciate the color there and then and then just also near you guys are are you know, obviously I think top five in the workers comp market. Just wondering if you could give us in sam's or the percentage of that book that in healthcare another front line responders.
What sort of Pittsburgh you have that.
It's I I won't give you specifics and only to say about health care is not a is not a meaningful part of our book of business.
Great. Thank you.
You're welcome.
[noise] [noise] I good morning, everybody. It's a couple of question one no.
Further law about <unk>.
Greater and nothing by on with a lot of broken working from home I can't.
Can you speak more clearly I'm sorry, just the yeah, it's not <unk> can you hear me.
Can you hear me better now now I can.
<unk>. So my my first questions around Ceiba I know you guys have a large cyber back. This there's been speculation or talk about an increase that fiber risk considering that have employees are working from home.
<unk>.
Do you see that as a large issue and if so how can be industry address that.
No today, we're not we're not seeing I, a meaningful change and patterns.
Okay.
And then the second question is.
More philosophical question, but you know I I think you've seen several insurance.
<unk> come up maybe articulate some be exclusions around 10 done making around a covert 19, specifically and Paul foods.
You think that actually could create an opening for the plaintiffs bar to go after prior language that woods may be less explicit in the exclusion.
You know I can't speak to what People's manuscript form so look like and therefore, whether they're correcting weaknesses with that I I can't speak to that the generally no I think covert 19 or a pandemic related exclusion to just belton suspenders.
On policies on the basic policies that require direct physical loss.
Okay, if if I could see one of a quick one then I think in response to bind scratching kept at the vast majority of your business interruption policy have physical damage trigger requirements P. thing anything about.
What how how many of your policy kind of violent.
No.
It it really no it's it it.
I'll leave it at that no. There is it's where it's appropriate it does.
Okay.
<unk>.
You're welcome.
[noise] autonomy.
[noise] <unk> I guess I'll try one more time on this business interruption, but I mean, I guess Ah.
One question I have <unk> is the real question into the business interruption exposure, how many or is it how long.
As if like don't happen, which which kind of more relevant in terms of deciding that loss.
Isn't that again.
Is the question more about the number of policies that sort of what the questioning and then so far that you know what percentage might.
Actively cover the virus my question is.
How dependent without loss ultimately be on how long they'll walk down is in place or in other words are there other camps and limits on that.
There are toxin limits in in in all policy.
And.
Duration of shut down there, it's just stocks came out of business interruption that.
That.
Length of shut down can impact.
And doesn't packs of already have lost.
Pretty.
Basically.
He'd be like Oh.
<unk>.
<unk> and then my other question just signals sent back you know I know you mentioned in the general aren't that this morning that ultimately the industry will pay out tens of billions of dollars in Queens.
Is there.
<unk> your mind that you should get good jobs market share those claims should be more or less than a but it's global market share is currently it's.
<unk>.
I think.
I think shub from everything right now we're pretty good underwriter.
We're pretty button, but discipline shop.
We have good controls.
<unk>.
I have no reason to believe that job to do something else lives.
You know this is a significant event for the industry.
And it's going to be a significant event for jobs as well.
It's earnings about sonata balance sheet.
And I do think it will be the largest loss so.
Single was in the industry history, when you add up both sides of the balance sheet.
The capital impacted industry.
<unk>.
Yeah.
Oh come from Larry Greenberg.
Oh I had.
Thank you very much I just want it beats are in that I understand the accounting Indian and how you're going to recognize losses in in the second quarter. So should we assume that you will put up a catastrophe or what you expect.
Will be you are old permit exposure from <unk>, you know recognizing that so much you see being and there's a lot of unknown down the road, but but that you are plan.
We will let the facts speak to us.
We will.
We will put up or loss based on the facts as we know them at the time.
When we come to close the books on the second quarter.
And I'm not going to speculate ahead right now.
And we will then provide.
Our perspective in color around that to help define it and give you will sense.
But I'm not going to speculate on world will be by the end of the second quarter.
To give you just centered of color on the question yeah.
Okay, and then general depends on what we know <unk> you still get used to being in the world with a lot of unknowns in a lot of uncertainty right now.
And you're you're requesting certainty.
And there's a great deal of uncertainty.
And.
That is for.
Worksheet projection related.
And.
I would caution against.
Against trying to over speculating on it.
Yeah, I'm really I'm I'm really not asking for any level of Sir E.T., a really good v. and and to to.
Hmm put a number for what you you know given you are level of information and at that given point. The time for you can best estimate.
To me as your ultimate exposure.
Exactly right, we will put her up and I mean, we always do our best estimate of ultimate loss.
<unk>.
<unk> Oh, we used to that.
No difference <unk> were consistent that way.
So you can impact.
Thank you and that and then she had.
Curious on your thoughts on.
Legislate is.
Proposals.
That might be <unk> yeah.
You know, probably just froze actively but <unk>.
<unk> is there any conceivable model, you know where government involve man could be helpful. On a back from that it made sense.
There is a.
By absolute we see a public private partnership prospect with like.
I don't see the I don't see the.
The.
The sense of one on some retrospective so there is and I'm going to give you both very quickly.
The retrospective one would say well why don't you pay the be all eyes losses, and the government will back stop you 100%.
Well.
Right now the government's current program to provide loans.
Then become gramps, if you retain your employees.
Fairly efficient way versus now we create some beside way and by the way B.I. insurance to adjust to claim requires that you you prove it's an ascertain net loss you have to prove what's your expenses were and and and what.
And your loss of revenue and all of that and that's I mean, you'd you'd occasion of that is is messy and takes time varying and it's time consuming and it's wandered a time and we're and and what matters right now it's cash flow into small businesses and so it.
It wouldn't be inefficient way of dealing with the cash flow needs. The government's already greater to program. So what problem are we trying to solve on a prospective basis I see it differently.
Why doesn't the industry under right pandemic.
Because of the the size of the tail as I say it has it's an event that has no geographic or time limit and so the K.L. is so great. The industry has a finite balance sheet that can't take insulin at risk if the government wouldn't take the tail risk.
And take the significant.
Ross on in in in a pandemic ease that the industry I believe could take a retention.
I could be underwriting pandemic, a little very different but a little like I'm think about trio.
And and I can tell you I'm in favor of a public private partnership in shoulder reading the burden in the future and shoved has put together its own proposal I, we will be sharing that around shortly with the appropriate parties.
Well, it's inside the industry in outside.
Thank you very much.
You're welcome.
And.
I would.
<unk>.
I have for any additional are closing remarks.
Thank you off enjoying next this morning, we look forward speaking with you again have a nice day and stay well.
Yeah.
Right.
[music].
Oh.
Oh.
[music].
Oh.
[music].
Yeah.
Yeah.
[music].
Yeah.
[music].