Q2 2020 Chubb Ltd Earnings Call
Okay.
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And if he would like.
Please press star one.
For opening remarks on introductions I would like.
And your Vice President Investor Relations. Please go ahead.
Thank you and welcome to our June 32022nd quarter Earnings Conference call.
Report today will contain forward looking statements, including statements relating to property performance and the impact is a covert Nike pandemic [laughter] economic Oh there.
Okay.
Actually this mismatch and economics market conditions, which are subject to risks and uncertainties and actual results may differ materially. Please see our recent actually she filings earnings release their financial supplement which are available on our website at investors dot shops dot com more information on factors.
The second effect.
You also refer to date to non-GAAP financial measures reconciliations of which for the most direct comparable GAAP measures and related details are provided in our earnings press release at financial supplement.
No. It's like introduced our speakers today first could have Evan Greenberg, Chairman and Chief Executive Officer, followed by fill backhaul, our Chief Financial Officer.
Then we'll take your question.
Also with us to assist with your questions are several members of our management team and.
Now, it's my pleasure to turn the call over to others.
Good morning.
Go, but 19 is independent of historic proportions.
I'm, sorry being societies in autonomy is globally.
This is businesses and individuals hard.
The impact will be with us for some time.
Sure I'll, probably spend is performing well well naturally shouldering or burden of responsibility supporting our insured [laughter] businesses and consumers.
Oh, good morning gene so slow rolling global catastrophe.
Impacting virtually all countries.
Unlike other natural catastrophes.
Guys know geographic or time limits.
Your bank continues as we seek.
Together, the health and consequent economic crisis will likely reduce the largest slawson insurance history, particularly considering its worldwide scope and how both sides of the balance sheet are ultimately im sorry.
We pre announced a few weeks ago, an after tax code related loss estimate.
1.2 billion.
Which essentially cost us a quarter earnings. This loss is an estimate ultimate loss from the pandemic an economic crisis.
Based on everything we know and can for just.
The estimate does not include for the most important credit for potentially lower current accident year losses from a decrease in exposures, except for a very modest amount.
Looking beyond this quarter's catastrophe losses, and the shot or wouldn't pass is an important story to tell about our company.
Our underlying health things like Palo Verde Directionally, we're capitalizing on current industry commercial B and C conditions.
Our published do you see combined ratio was on what grew 12.3.
Total aftershocks got charge, one and a half billion.
Including 353 million of natural catastrophe and silver one rest related losses.
Separately, we took an after tax charge of 205 million and unfavorable prior period development.
I don't law was stationed related claims emerging predominantly from or Viber statutes that came into effect last year.
If anybody's moving papers stopping.
On a current accident year basis, excluding cats.
My ratio was 87.4.
<unk> behalf improvement over prior year, its current accident year underwriting income over 18% in constant dollars.
The loss ratio was essentially flat with prior.
The expense ratio was no wonder now points, we benefited from expense saves student the shutdown as well as our ongoing efficiency efforts, while we continue to invest in important areas to improve our competitive profile.
In the quarter.
Book value benefited from actions taken by the fed the supports the economy during his exigent time, which positively impacted asset values will pressure future investment income.
Per share booked value grew about 5%.
Tangible was up over 7% both are now essentially flat for the year.
So we'll have more to say about investment income book value cats and prior period development.
Broadly speaking to themes impacted gross in the quarter on one hand shrinking exposures from the decline in economic activity wait negatively on growth and on the other hand favorable commercial b and C underwriting conditions contributed.
Growth.
In the quarter PMC net premiums grew 1.4% in constant dollars growth was impacted due to onetime charge. We took the estimate the ultimate impact on premiums that we will incur from exposure adjustments on enforce policies due to a reduction internet.
Anomaly activity.
Excluding the charge, which is a better way of viewing apart underlying quarterly growth we grew 3.9%.
This is made up of 9.1% positive growth globally in commercial B and C.
And 6.3% negative growth in consumer lines, which includes an age travel and personal lines.
In the quarter, we continued to experience favorable underwriting conditions, and commercial b and C, which varied by geography and product line.
Commercial PNC pricing environment.
Equally strong North America the UK.
Continental Europe in certain locations in Asia Pacific.
And it continues to spread further.
In North America, which includes the U.S. standard in Bermuda.
Commercial PMC net premiums grew 10%.
Adjusting for the one time premium George I, just mentioned and on the back of strong new business growth.
Mmm retention.
With all our major accounts in specialty business growing over 12% and our middle market in small commercial business growing six and a half.
In our international General insurance operations commercial B and C. Net premiums grew over 5.5% in the quarter in constant dollars Chubb global markets, Our London wholesale business grew over 20%.
While our commercial PNC business in Continental Europe grew nearly 16%.
In those markets, where we group we continue to achieve improved rate through exposure across most coal commercial product lines.
Overall rates increase the North America, commercial B and C like 14%.
Major accounts and specialty rates for property were up 21%.
Casualty rates were up over 25, and a half and financial lines rates were up over 18.5%.
In our middle market business rates for property were up 18%.
Casualty rates were up over 12, excluding workers comp pump rates were down one.
And financial lines rates were up 14, or the half a percent in the middle market.
In our international General insurance operations rates were up 16% in our international retail business and 20% in our London wholesale.
Consumer lines growth globally in the quarter was severely impacted given the pandemics effects.
Sumer related activities.
Our North America personal lines business was an exception as we experienced like the safety and quality in our high net worth segment at premiums written in the quarter were up 2% on an adjusted basis and Retentions remained very strong at almost 97%.
In our international personal lines business, predominantly auto foam and cell phone premium shrink, 12.5% well our globally at age premiums the western International together were down 13 or Ninep per se.
Our Asia focused international life insurance business, However had a good quarter with net written premiums up 30% in constant dollar.
In sum to provide you a better [laughter] effective though we typically provide limited guidance. We expect Chuck will have on a publish basis positive free from revenue growth for the full year.
John Keogh, John Lupica, Paul Krump, one Luis Ortega can provide further color on the quarter, including current market conditions and pricing trends.
As a company we continue to operate around the globe as a normal company during extremely abnormal times, depending on where you are in the world with exceptions, a substantial portion of our international staff.
In the office on any given day.
Includes most of Asia Pacific, we're about 50% or back in the office and in some countries, 100% Europe, where with the exception of Spain, and Italy, 25% or back a while the UK remain closed we expect about 20% to 25% to return in August.
We have been ready to begin or return to office in the U.S., but the pause given the increase in infection rates in many parts of the country.
Among developed countries in the World do you what stands out and it's in ability to manage the health crisis on a national basis. This is damaging our economic recovery and our image globally.
Where conditions have stabilized in the U.S. like the northeast we've gotten to bring employees back to the office for meetings to collaborate learn and plant we are ready to return on a broader basis when conditions warrant.
The health and wellbeing of our staff is of Paramount concern.
Sure It isn't in Central service, we never stops per even paused in providing coverage paying claims for providing risk engineering and other services, who our customers and clients.
We're very active on a daily basis, with our clients and distribution partners globally, and we have done so with service levels that are virtually the same as we provide normally.
I'm going to say a few words about the business interruption issue that I know is on the mine since many.
As you know the insurance industry is under attack by the trial far over business interruption claims.
They represent many businesses, which purchased VI coverage does not provide cover for pandemic. These customers are understandably disappointed an upset.
Like this it during these are attempting to torture for reverse engineer insurance contract language.
Europe business interruption coverage that for the most part simply doesn't exist.
Upwards for a pandemic was never contemplated and standard business interruption policies and therefore, no premiums were ever charge for that risk.
In fact state insurance regulators will prove the policies have been clear. This risk is not cover that the industry could not covered the massive open ended snails rest of a global pandemic because it threatens the industry solvency.
Without the federal government, playing a major role to cover the tail risk and dynamics are simply under uninsurable on a broad basis.
Standard be Ike policies, which are in it ends up to what prior policy required the.
Physical loss for damage to the property for example, fire or flood damage is the property and prevents the business from operating while repairs are being trade.
Oh, good 19 does not cause physical loss or damage to a property.
Despite the trial bars efforts to influence some government officials in the wording of their civil public shutdown orders.
No it doesn't cover pandemic standard.
Coverage provides good value should the money.
We estimate the industry's pays out about 70 cents and insurance claims for every business interruption production dollar collected with most of the remaining amount paid in commissions premium taxes and other expenses.
For a job in addition to our normal losses. This year, we will pay claims for policies, but specifically covered certain pandemic related shut downs such as those for the entertainment industry.
We care deeply about properly supporting servicing all of our policyholders and I have to particularly particular sympathy for the millions of businesses that have suffered terribly during the pandemic forced economic shutdowns, but it would be wrong.
In fact catastrophic irresponsible to pay the claims of those who didnt have coverage and in fact didn't pay premiums with a bridge by using funds that had been properly reserved for the legitimate claims of the vast majority of our BMC policyholders.
Who number over 100 million globally.
Ill provide some context in 2919 Chubb paid 24 billion on approximately 4 million property and casualty claims again that pay billions of dollars, they're not covered claims by reading the reserves or capital need.
Paid claims on other kinds of policies, such as auto and home commercial insurance exposures respond to natural catastrophe such as our Danes wildfires would be irresponsible to the vast majority of our policyholders and to our shareholders.
Beyond the business interruption challenges at the current Cobot 19 crisis. The insurance industry has an important role to play in society in in the economy and that includes fully participating in the development of a prospective future pandemic business interruption solution.
Sure crises arise.
Earlier this month Chubb released its pandemic business interruption program designed to mitigate the economic disruption in losses in the event the book future pandemic.
Our framework is not the first plan to be introduced a public private partnership framework. We develop has important differences from the other leading proposals.
By sharing our dog ideas and approach, we hope to spark and influence productive debate on a solution that will work for businesses of all sizes.
Sprayers, our industry and the economy more broadly.
First and foremost I believe the industry can and should take pandemic risk along with the government.
As apparel that can be covered through a greater degree than we do today as long as the tail exposure covered by the government.
It is our job to figure out how to do that we can be more than simply play and administrative role, where we belittle ourselves, we're less relevant and we can or should be.
Framework, we announced has attributes that we believe we'll make for a successful program. It accounts for the different needs of small medium into a modest degree large businesses.
Premium for small business will be affordable and they will be paid quickly large companies would pay a fair and risk adjusted price to both the government insurers her pandemic cover in a program built on free market principles. The government gets paid for the use of its balance sheet.
Not a handout the larger companies.
Our framework has incentives for broad participation by the industry.
By committing insurance industry capital and providing opportunity for increased risk sharing overtime as direct in secondary markets develop a pandemic burden of shouldered by the government will ultimately be lessons to a degree.
This is an important issue for a nation, we look forward to contributing to the dialogue is policymakers work to refine most effective solution.
Before I turn things over to Phil I want to say a few words you got an issue the concerns all of us.
And that's the persistent challenges arising from bigotry racism racial and justice and society, particularly for Black people.
The events that unfolded across our nation. These past few months as focused our attention on what we should do is citizens as in this and as a company.
We characterize chubb's culture as an inclusive meritocracy.
Earnestly strives to achieve an environment, where all colleagues feel comfortable reform to their full potential and are recognized for their contributions. It's a never ending work in progress. We can do more we developed recently shared with our employees an action plan, which we will.
Hold ourselves accountable.
Plan has a few simple objectives.
We didn't want to enhance our individual and collective understanding of racism in society strive within chubb to be ASCII racist in our behavior as individuals and doesn't organization.
We want to actively support each other.
Starts with more Frank dialogue between our employees of color, particularly black colleagues and our white collar like you create better understanding where awareness about the realities of racism.
We will hold leaders more accountable for cure rating and leading an environment of inclusion.
We'll eliminate policies and practices that potentially create bias and inhibited our ability to create greater racial mix of our workforce at all levels of the company.
This is an enduring process not end momentary event in time.
We believe we ever responsibility to do our part with Cantor open minds and a commitment to change.
In closing our company is very strong our balance sheet is in excellent shape attract outstanding shape, and we are operating well around the globe during very difficult times, our underlying strengths are enduring we're capitalizing on favorable market conditions as we.
Obviously navigate the extreme headwinds and uncertainty created by cobot maintains with that I'll turn the call over to fill and then I'm going to come back and take your questions.
Thank you Evan.
Our financial position at quarter end is exceptionally strong cobot 19 isn't it earnings event for job well our balance sheet remains in excellent shape.
Our balance sheet features a 112 billion double aided double a rated cash and investment portfolio for the duration of four years.
Consistently conservative approach to loss reserving.
Total capital of 70 billion.
We are a balance sheet business operating an extremely uncertain times and we have maintained a conservative level of capital.
Our operating cash flow for the quarter was 2 billion and our liquidity on a global basis continues to be EXL.
In the quarter, we returned 353 million to shareholders in dividends.
Adjusted net investment income for the quarter of 857 million pretax was below our guidance range, mainly due to foreign exchange lower rates on our floating rate obligations and an acceleration of prepayments in the mortgage loan portfolio.
We remain consistent and conservative in our investment strategy adopt do not expect to materially adjust the portfolio's asset allocation.
We intend to maintain a high quality bias and conservative duration.
That easing actions have been slated asset values, causing a disconnect with underlying credit conditions. So many classes of that appear mispriced, we will continue to focus on risk adjusted returns and not reach for yield.
Well there are a number of factors that impact the variability in investment income, we now expect our quarterly run rate to be in the range of 850 860 million.
Turning to book value per share book, and tangible book value were up 4.9, and 7.2% respectively in the quarter.
Core operating loss and dividend payment for more than offset by net realized and unrealized gains.
Quarter of 3.1 billion aftertax, including 2.7 billion and our investment portfolio.
410 million from favorable foreign currency movements, and 110 million mark to market gain in our variable annuity reinsurance portfolio.
The gain on the investment portfolio is due mainly to the narrowing of credit spreads in our corporate bond portfolio and a decline in interest rates.
At June Thirtyth, our investment portfolio was a net unrealized gain position of 3.4 billion after tax.
Our net catastrophe losses for the quarter or 1.8 billion pretax or 1.5 billion aftertax as previously announced and our further details in our financial supplement.
Our net loss reserves increased 2.7 billion in constant dollars, including a significant catastrophe losses and adverse prior period development.
The Pedro incurred ratio was 59%, reflecting a catastrophe losses.
We had unfavorable prior period development in the quarter of 75 million pretax or 52 million after tax.
This included a charge for U.S. child miles station claims of 259 million pre tax for 205 million after tax as previously announced the vast majority of these losses will be viber statute related.
Excluding this charge we had favorable prior period development in the quarter of 184 million pretax split approximately 79% and long tail lines, principally from accident years, 2016, and prior and 21% in short tail lines.
Our core operating effective tax rate for the quarter of 15.3% was impacted by the high level of catastrophe losses through six months, our core operating effective tax rate was 16.5% slightly higher than our expected 14% to 16% range, we now expect or annual core operating.
Tax rate to be in the range of 15% to 17%.
And with that I'll turn the call back over to Karen.
Thank you at this point, we're happy to take your question.
And as a reminder, if he would like to ask your question. Please.
Darwen.
Yes.
Sure They hear me fashion.
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Again I didn't.
My question.
My first question from Michael Pellets with Morgan Stanley.
[noise]. Thanks.
Good morning, everybody Evan Thanks for other comments, so some of the stuff and because of that.
I guess can talk about the impact that the coal that and Shelton plates is having on your acquisition expense ratio and then on longer term, maybe you've made some good good strides expense ratio in general in private rooms, so kind of how we should think about a good run rate going forward from there.
Yeah.
That's a b C acquisition ratio benefits.
Fundamentally from a mix of business change.
You know you had consumer lines that.
As I said it had a negative gross to them and they run a higher acquisition cost.
And commercial PNC does and we are growing underneath as you could see commercial PNC at a rapid clip and it has a lower acquisition ratio.
The opex ratio did benefit.
Reasonably well in the quarter from from co bid on related shut down and I expect it will continue to receive benefit that you know benefit from that.
As we go forward in future quarters.
And so overall I think the expense ratio will continue to benefit in future quarters.
How much and to what degree I'm, not going to prognosticate or give guidance on.
Okay. Thanks.
I guess I guess some question on on on cold and frequency benefits.
Commercial and can you talk about what specific line maybe benefit the most from frequency manifolds and then.
With some of the reopens, we've seen recently.
Has there been any change in.
And trends that someone the frequency.
It was an uptick on.
Yeah, you know.
Commercial lines fundamentally most classes of business.
And traditional property and casualty.
Benefit to wouldn't degree.
And it varies by line of business from the code bid.
Shut down.
On one hand on the other have we took a massive.
Charge to recognize the coded related claims that will arise, but excluding that the frequency when you take those away the frequency and severity in most traditional lives.
We will benefit because I know youre benefiting.
At least to this point in time, because commercial activities are down and that would be both in the short tail lines as well as in the long tail lines, but it varies by class.
Obviously in professional lines to a lesser degree than say in general casualty or in excess casualty.
And as you know.
Our policy has always been.
We recognize bad news early and were very slow to recognize good news and so any of the benefit we might be seeing short term right now for the most part from the the reduction in economic activity in the shelter in place.
And the lack of social activity around the world, we're very slow to recognize that I will be because we're in very uncertain times. When we don't know what the future is going to bring.
Secondly, what I would add is that overall pre commercial paean seats are the most part we are achieving.
Great that are in excess of loss cost trends and again, we're in uncertain times, we're conservative and in our approach.
[laughter].
Thanks Bridget.
I mean, we'll take our next question.
I'm sorry.
[music].
Hi.
Yeah. Good morning on my first question on follows up on your response. So last question on you guys are getting a lot of.
Well I keep that within your North America commercial thought picked up pretty nicely from where you guys want last quarter on can you just give us and Oh, you know where were lost trend within that business and just as we think and I recognize no gave us some guidance on opinion side and you don't.
Like give forward guidance, but as we think about price up you know in the key in.
Depending upon what your boss trended on just trying to get a sense.
The potential for margin improvement within that North America commercial book.
No I understand and Elisa I'm not going to give you much satisfaction and that question. We don't give forward guidance on that as you know and.
You know I'm going to rest on the statement that in most commercial lines areas. We are not all but most we are achieving rate in excess of loss cost trend.
Which is which is reasonable to achieve a proper risk adjusted return.
Those classes and it is needed.
As far as where the exact frequency and severity of loss is in trend is over the last number of months, it's very difficult to tell because.
And we measure it typically quarterly but at this point, we measure it monthly.
And.
You know because of the economic shutdown.
You really can't see what the actual is though it's lower we do though price on anticipation or reversion to the me as the economy opens back up an activity returns to normal [noise].
And on the do I.
I think I'm going to leave it there side the lease.
Okay. That's helpful. Then add up all about her.
My first question.
North America commercial the last couple of two kids as I said had some LPTA is on the book that had on.
Typically carries a higher loss ratios is there any I'll be keys on the top that second quarter.
Their work and as you know we write LPTA is virtually.
You know most quarters, it's just the the amount of it varies by quarter and this quarter. We did have LPTA says we do in most quarters.
Okay and it was moved in a reasonable range of what we wrote last year in the second in the second quarter last year was a pretty big quarter for Ltd.
This year, we wrote a number of transactions as well.
Okay, Great and then within North America commercial on your attention on went up to 84 and a half.
No one had been trending and hi, Andy on gain on anything specific to the second quarter or you know just as we think about maybe you know kind of a change in retention on in terms of that kind of go forward.
No. It's more of a you know the difference this quarter I would attribute more do would change of mix of business then.
And what we wrote and then I would to.
A a major shift in the retention net to gross.
Okay. Thank you.
Hello.
You're welcome.
Okay, well hear from Ryan.
Autonomy.
[noise] it makes the morning.
Just following up on that last one in North America commercial a there's clearly some cross currents area. So that structured transactions cobot frequency benefits, but there's about 0.7 points of year over year underlying loss ratio improvement I mean is that.
Fair representation of what you think the relationship is right now between great loss trend, maybe maybe around <unk> 0.7 page and like no commercial or even higher than that you didn't moving forward.
Hi, Maam, you know I'm as I said, Ryan I'm, not going to prognosticate future. We just don't provide guidance that way.
I made a couple of comments that I think they're probably important to you number one that we are achieving rate next in aggregate in excess of loss cost trend.
Secondly, we are.
We haven't noticed a major change in trend, but your but on the other hand, you know your massed by all of the co bid.
Related impact numbers three we have.
Hope it related benefit from the economic shut down given the period of greater uncertainty. We're in we are very slow and fundamentally haven't recognized good news. While we took what we think is it a reserve to ultimate.
For coated related losses.
And so you know in this period of time I think you're entered his our policy we were conservative in our underwriting them, we're conservative than our balance sheet management.
And in periods of greater uncertainty.
Puts a point on what is our normal policy to recognize bad news early and and if there is favorable news to record highs it in a prudent way late.
Understood.
I guess my follow up is could you just talk a little bit about the kobin charge that you talk it's obviously because we're doing.
Did you ever down that had to wait what do you think the reason would be would it be another outbreak later in the year like you know give us a sense of why you know the degree of conservatism around that lost selection bags.
[laughter] you know its.
We didn't do it in in a conservative way, we pitcher right up middle we've modeled.
But we think.
And then and we took from what we know of.
Others economists will reject the.
From from various organizations, we we projected what we think the economic patterns are going to look like.
We projected what we think the the you know from the best we know what's the time with the health situation is and will be in how the to work together.
And therefore based on all the information we know today.
We modeled both top down and bottom up, particularly short tail losses longer tail off the model more top down and based on what we know of prior events in history, and how things work and and so we used all that.
Based on or on the picture of economic than health is we can see it going forward from.
This pandemic event to project.
Loss to ultimate.
Did we get it.
Decisively right God knows and.
Is there risk around that of course, there is because you tell me.
What's the next six or nine months precisely gonna look like no one knows.
There's great uncertainty, but we did our best within on certain times to try to reflect the ultimate loss on our balance sheet our liabilities.
Hello.
And next we'll hear from.
Sam.
Please go ahead.
Good morning, and hope Youre well.
I was wondering if you could talk about.
How the business and you auction clean sheet evolves.
So just yes, but outside.
It looks like to me it means that.
Courts are trending industries, who either.
So from less I don't have a great sense of how that's happening outside.
I see how that my preference.
[music].
Yeah, you know Paul it's some it's very early days.
The UK for example is you know when you're following I'm sure. It's in a process, but that is very interesting whether the regulator has stepped in and to avoid like we have in the U.S. just a free for all of lawsuits and and and a waste of victory.
Spends and time and money come it's kind of stepped in and interacting so represented.
The policyholders all of their arguments in one place for for a panel of judges with the industry presenting it's arguments and not one's going to unfold and it's a very rational process and by the way. If you haven't followed it I would I would tell you it really is worth doing.
Its admirable how they're doing about it.
And that will unfold over a period of time and come to conclusion.
From what I, if I recollect properly by around year end in other countries, such as Australia et cetera. Its Bubbling I do have a number of court cases that are better better just proceeding to two to test the.
The veracity of the wording scitor and better against regulation, but that is quite different than in the United States and then you know where where the.
Were the most activity is and that will be on to the longest most prolonged period of time.
To resolve is is in the United States.
Yes.
And then my second question, we've seen a lot of waiting.
Sure its business.
I'm sorry.
Sorry can you repeat that.
I said.
A lot of wage increases reinsurance business I was wondering if the changing market environment changed your view on.
Before you know approaching two new jeans business overall.
Yeah, you know in the main we're we're we're pretty steady about it.
We my reinsurance fundamentally to be able to provide limits of liability from beyond what were what we want to.
Expose our balance sheet to we bias for protection of volatility where it makes sense, we measure all reinsurance. So we do it for fundamental business purposes, and we buy reinsurance in a manner, where we measure the risk reward in the proper.
Risk adjusted pricing, that's what we're willing to pay for corporate taxi and so you know those under those fundamental principles lead to a pretty steady approach.
At the same time, obviously when rates are not adequate to earn a reasonable risk adjusted return, we shrink exposure as a company.
When rates are adequate for to earn a proper risk adjusted return.
And it may increase to a point, where they justify greater volatility we will increase our net exposures and and we do that alongside how we purchased reinsurance.
Oh, it's oh.
To reinsurance.
Whether you like interest Oh I'm sorry.
I'm, sorry, yes, I I got it.
Yes, we are we are more active and.
In our in our reinsurance business. It is a it is a greater growth area for Chuck now, which like like our E N S business.
I'm, particularly in London, where we have we have been disciplined and shrunk for a number of years, because we weren't getting paid to take risk, we're getting paid more adequately to take risk and in a number of classes and that is growing by the corridor and therefore.
We're leaning into that.
And our reinsurance business from what we can tell today, we'll continue to expand as we go forward.
Thank you very much.
You're welcome.
And next.
Great.
Good morning, just that far I have a nice there is a little bit of feedback that we're hearing throughout the call. So I'm not sure what's going on there but.
Hi, I'm hearing it too and then I hate it.
Yeah, we do feel so.
It's neutral can you still can you still here the answers and can you still see I'm here well enough, though to get the information yeah. Yeah, Yeah, it's coming through it's just there's it you know it's it's just there's a little feedback somewhere or not in the system. So.
Ah it in your prepared remarks, or you offered to have some of the other executives provide some commentary around conditions pricing et cetera, and the respective segments of the business.
Wondering if you could follow through with that offer.
Loves to thank you for asking I'm going to start with John Lupica on major and specialty and then I'm going to have Hum, Paul Krump do middle market [noise].
Sure. Thank you everyone. Thank you Greg Let me give you a little more color on I'm overseen and major in specialty I'll start really with rate premium retention.
And our major portfolio, we're looking at over 16 points of.
Pure rate increase.
Westchester our DNS business, we're looking at 18.2 rate increase.
And then for me to our high excess business you know, we're looking at 40.2 rate increases.
I break that down is it just some segments on the retail side.
Our primary casualty Riskmanager business is getting some of its pest trait.
That's an organization that you'd point to rate.
The adjusted premium retention ratio of 97.5% alright take into account when large front to trade.
Excess casualty book, we're getting 48.3.
Cheating, a 111 points of premium retention.
And as Evan noted in our property business, we're getting 21 point you're right.
With 109.2 of your opinion retention.
And then a financial lines again another note in the retail business I haven't had noted 18.2.
No 103 points coming a retention.
And we're seeing the same at our E N S lines of business or property business is getting 18.28 with 103 points it pretty retention.
Casualty book is getting 31.3.
At 87 points of premium retention in our financial lines is getting 70 points or it.
So as you can you can see pretty healthy rate environment pay retention inside of the retail unevenness marketplace.
Paul from Craig.
Just flush hi, Greg Good morning, I'll start out with the amount of profit having in mentioned are getting over 18 points of rate there our retention in that line of business is 95%. So just just excellent.
As respects package, we're getting six points of rate and 97% retention.
In our access umbrella, we're getting over 20 points of from a pure rate increase and 94% retention autos got 11 points of rate on it in the last quarter.
99% retention in our professional lines is haven't mentioned as a fortune to happen there were getting 98 points of fun.
Of retention as respects terms and conditions just briefly I tell you that obviously launch these rate increases for we're tightening terms and conditions I'd say in particular, we're pleased with where deductibles are going and how much. They have increased we've also been able to.
The trimmed down some of the sub limits for the Caf girls sort of.
Flooding any quick as.
As well and the excess umbrella, we've been working on attachment points and.
That's been going extremely well also.
They go Greg more than you ever asked for a while it's never enough.
[laughter] Keith if you take the all of those businesses that were just summarized with rather robust robust rates what percentage of the total premium are we talking about just to put this in perspective, because not all of your business is getting these type of rate increases.
When I when I add in the international areas that are achieving the you know that are in the in a similar hard.
Market conditions.
Well, it's over 50% the bar premiums.
Locally.
I mean channels of business not just commercial PNC.
Each part of our total business.
Okay. Thank you and then and then I'm you know obviously it begs the question when you know we're hearing about the substantial rate increases.
What's the commercial customer response to this because this is far exceeding.
Inflation trends with the less their business and.
A lot of your commercial customers are experiencing crushers because of coal bed and the economic slowdown or whatever you want to call. It I have to believe you're getting a lot of customer pushback or maybe if you get some perspective around that.
We're we're not we're we're actually there is a lot of goodwill between us and customers look why is this occurring.
Because.
Loss cost trends.
Even when they're benign has far exceeded.
Premium rates charged for for a prolonged period of time rates have gone in one direction, while loss costs have continued to rise and so industry results overall are severely elevated and many lines is this.
And this just were so inadequate and pricing and it's varied by company. If you were if you were trying to gain market share at that time, well, you're you're it's coming home to roost and it'll continue to come home to roost for period of time, if you were more discipline.
And shrunk exposure at that time, and it had less impact on you but rates are now moving in the direction, we're overtime to achieve adequacy in their lines, where adequacy is achieved and their lines were given loss cost trends and then you have on top of that things.
Like social inflation that if exacerbated trends means that rates need to continue to move higher will be other dynamic about all of that is that.
Companies are pulling back and capacity is less available.
Stepping up we're offering capacity were consistent to our customers that were there were not in your now we've been consistently speaking to our customers that but you know what this is not going to last the good times of of rates going down or premiums going down.
His irrational and it's not going to last and that but.
We will remain consistent it's the market that will wane and wax well, they understand and see that and by the way as we can get more adequately paid and as capacity is shrunk, we've actually stepped up with with bigger lines and bigger solutions and born free.
The age of solutions to customers and so were consistent in that service in during the shutdown period. There is no company that has been more available to dialogue entity on the front line with customers and respond on a moment's notice globally than kind as Chuck.
So I would actually say, our reputation and or image at all of this in the goodwill with customers.
Has been building and yes, I understand the notion that insurance pricing is going up and you know all of this is going on we coated.
That trend, which is very rational what's occurring for Pope it ever began and you know to deploy the capital you've got to get paid adequately and capital risk capital is precious.
Thank you for the answers.
You're welcome.
I mean, we'll take our final question.
And with Evercore.
<unk>.
Thanks, Good morning, I, just a quick numbers question on the current accident year loss ratio ex cat in North America commercial.
Just in the past you've talked about the impact that some of these large structured transactions have had on the loss ratio I think in in 2018 29 team and no second quarters. It was around 100 basis points of the of an elevation and the loss ratio.
Just wondering how I should think about that impact this quarter within North America commercial.
Yeah, you know it had an impact on it I can't give you an exact basis point number its wonder, though so we could buy kick off line with your but but it could hide [laughter].
It had and if we rode it we wrote LPTA is fairly consistent in the neighborhood of what we wrote in aggregate.
Last year.
So it and you know they have an elevated impact on it.
You know year on year year on year, Evan the impact was 70 basis points.
Thank you Phil.
Great. Thanks, Evan and so that's that's helpful. And then just just a question so.
The recent GLP stimulus that includes some liability shields for businesses and health care.
Providers, just wondering how you're thinking about this you know how important this is for you in the industry and.
Outside of this going through just wondering what sort of underwriting actions, you're taking mitigate future liability claims that you may be getting.
You know.
I think that.
This kind of liability.
Safe Harbor.
That the Republicans.
Our proposing as part of the Bill.
Is so important for ordination.
We have we right now can front.
Such economic headwinds.
Between.
Toggling between trying to manage the health crisis.
And open up an economy.
And the burden on business.
All businesses throughout the United States today.
As extreme.
Two.
Add on to them.
The additional expense and burden.
Of liability exposure.
When for those who or.
Yeah.
Practicing the right protocols in protecting their employees and customers and trying to open up the economy.
Two ascribed to them.
The burden of liability.
And caused them to be more cautious or 40 stores.
Additional economic expense.
And which ultimately benefits frankly, one industry.
And that is legal profession the trial.
I think would be a travesty and a shade.
And and.
And I think that is the wisdom.
To to.
To try to.
Removes some of that and create and create certainty for business in an environment of tremendous uncertainty.
And.
Not only do we.
Applaud it we supported actively.
As a company.
And not for the benefit of the insurance industry.
The benefit of all of our society right now we need to open up this economy, we need to control. This health crisis better than we are and my God not believes that living at home and working from home is the normal the new norm.
Total for America.
I didn't make any sense to me.
With that thank you very much.
And.
Today's question and answer session I would now like to turn the call back to kind of buyer for any additional.
Thank you all for your time and attention. This morning, I look forward speaking with you again next quarter, Thanks and have a good day.
And this concludes today's conference. Thank you for your participation you may now.
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