Q2 2021 Chubb Ltd Earnings Call
[music].
Ladies and.
And please standby.
And welcome to the Chubb that Ltd second quarter 2021 earnings Conference call.
This conference is being recorded on.
All lines will be in a listen only mode. Following the presentation.
And the lines will be opened for questions.
And would like to ask a question you can send them by pressing star 1 on your telephone keypad for opening remarks, and introductions I would like to turn the conference over to Karen Beyer Senior Vice President of Investor Relations. Please go ahead.
Good morning, everyone and welcome to our June 30th.
2021 second quarter earnings conference call.
For today will contain forward looking statements, including statements relating to company performance and price.
And business mix growth opportunities and economic and market conditions, which are subject to risks and uncertainties and actual results.
From materially please see our recent SEC filings earnings release, and financial supplement which are available on our website at investors Dot Chubb dot com for more information on factors that could affect these matters.
We will also refer today to non-GAAP financial measures reconciliations of which to the most direct comparable GAAP.
Lets me just and related details are provided in our earnings press release and financial supplement.
Now I'd like to introduce our speakers first we have Evan Greenberg, Chairman and Chief Executive Officer, followed by Peter and our Chief Financial Officer.
And then we'll take your questions.
Measures with us to assist with your questions and several members of our management team and now it's my pleasure to turn the call over to Evan.
Good morning.
As you saw from the numbers Chubb had an outstanding quarter highlighted by record operating earnings and underwriting results.
Banded.
On margins and double digit premium revenue growth globally.
The best and over 15 years.
Powered by commercial P&C and supported by continued robust commercial P&C rate movement.
Chubb was built for these conditions.
We've averaged double digit commercial.
<unk> PMC growth over the past 10 quarters.
Breath of our product and reach combined with our execution oriented underwriting culture.
And our reputation for service and consistency.
Enable us to fully capitalize on and opportunity globally.
Commercial conditions, such as these size and scale.
Our friend.
Core operating income in the quarter was 1 billion and 620 million and were 362 per share.
Both records.
On both the reported and current accident year ex cat basis.
Underwriting results and the quarter were simply World class. The published P&C combined ratio was 85, 5 and current accident year was $85.4 compared to 87 and 4 prior year.
The 2 percentage points of margin improvement were almost entirely.
Loss ratio related.
Current accident year underwriting income of $1 billion, 2 was up 27%.
While on the other side of the balance sheet adjusted net investment income of 945 million also a record was up nearly 9.5% from.
From prior year.
Peter will have more to say about cats and <unk>.
Prior period development investment income and book value.
Turning to growth and the rate environment P&C premiums were up $15.5 globally with commercial premiums excluding agriculture up nearly 20.
And 1% to.
The 15, 5% growth for the quarter and $12.6 for the first 6 months, where the strongest growth we've seen since 2004 grew.
Growth in the quarter was extremely broad based with contributions from virtually all commercial P&C businesses globally.
And from those serving large companies to mid sized and small and most regions of the world and distribution channels.
We continue to experience a needed and robust commercial P&C pricing environment and most all important regions of the world with.
<unk> year on year improvement and rate to exposure on the business, we wrote both new and renewal.
Based on what we see today.
Confident these conditions will continue and.
In North America commercial P&C net premiums grew over 16% new.
Global business was up 24% and renewal retention remains strong at 96, 5% on a premium basis and on.
Our North America major accounts and specialty commercial business net premiums grew over 13% with each division.
<unk> major accounts, Westchester and Bermuda, having its largest quarter and history in terms of written business and the standout was our middle market and small commercial division, which had its biggest quarter and about 20 years driven by record new business growth and.
Strong retentions.
Overall rates increased and North America commercial by a strong 13, 5%, which is on top of a $14.7 rate increase last year for the same business, making the 2 year cumulative increase.
Over 30% and.
And remember in North America rates have been rising for almost 4 years. However, they have exceeded loss costs for only about 2 years now.
Loss costs are currently trending about 5.5% and vary up or down depending upon lineup.
Line of business.
General commercial lines loss costs for short tail classes are trending around 4%, while long tail loss costs, excluding comp are trending about 6%.
Let me give you a better sense of the rate increase movement.
And in line in North America and.
And major accounts rates increased and the quarter by about 16% on top of almost 18% prior year for the same business, making the 2 year cumulative increase over 36%.
Risk management related primary.
<unk> rates were up almost 9 general casualty rates were up 27% and vary by category of casualty property rates were up nearly 12 and financial lines rates were up almost 20%.
And our E&S wholesale business the cumulative 2 year rate increase.
Cash was 39% comprised of an increase of circa 18% this quarter on top of 18% prior year second quarter property rates were up about $16.5 <unk>.
Casualty was up about 21 and for non financial lines rates were up over 21%.
And our middle market business rates increased and the quarter over 9.5% on top of over 9% last year, making the 2 year cumulative increase 20%.
For property were up over 10, and a half casualty rates were up 11% excluding workers' comp.
<unk> comp rates were down at about a half a percent financial lines rates were up over 17, 5% and our middle market business.
Turning to our international General insurance operations commercial P&C premiums grew an astonishing 33% on a published.
Blish basis were 24% and constant dollars.
International retail commercial grew 27% and our London wholesale business grew 60%.
Retail commercial P&C growth varied by region with premiums up 36.5.
And our European Division.
And with equally strong growth and both the U K and on the continent.
Asia Pacific was up over 29%.
While our Latin America commercial lines business grew over 14 and a half.
Internationally like in the U S and those.
<unk> markets, where we grew we continued to achieve improved rate to exposure across our commercial portfolio.
And our international retail commercial P&C business. The 2 year cumulative rate increase was 35% comprised of increases.
Was this quarter and prior year of 16% each.
2 territories and particular, the UK and Australia stand out in terms of rate achievement, and our U K business rates increased and the quarter by 18% on top of a 26% rate increase prior year.
At the same business, making the 2 year cumulative increased 48%.
And Australia, the 2 year cumulative rate was 42% comprised of an increase of 23 this quarter on top of 16 prior year.
And our London wholesale business.
Business rates increased and the quarter by 13.
On top of a 20% rate increase prior year, so making the 2 year cumulative 36%.
International markets began firming later than the U S and again like with the U S rates is vaccines.
Year did loss costs for about 2 years now outside the U S loss costs are currently trending and 3%, though that varies by class of business and country.
Consumer lines growth globally, and the quarter continued to recover from the pandemic effects on consumer.
Related activities.
Our international consumer business grew 13% and the quarter.
And Thats on a published basis, it grew 5% and constant dollars breaking that down for you international personal lines grew 20%.
On a published basis, while our international A&H.
<unk> grew 6.5 but it was essentially flat and constant dollar.
Within our A&H book, a nascent recovery and our leisure travel business outside of Asia is beginning to result in growth.
And though passenger travel activity is still well below pre pandemic levels.
Levels and both our group A&H business with its employer based benefits and our consumer focused direct marketing business premiums were up mid single digits still impacted by the pandemic, but beginning to improve.
Net premiums and our North America high net worth.
And our lines of business were up over 2.5%.
Non renewals and California, and Covid auto related renewal credits had almost a point of negative impact on growth and the quarter.
Our true 9 net worth client segment, the heart of our business grew almost.
8% and the quarter.
Overall retention remains strong at over 94%.
And we achieved positive pricing, which includes rate and exposure of 13% and our homeowners' portfolio.
The loss cost inflation and homeowners is currently running.
First about 11%.
Lastly, and our Asia focused international life insurance business net premiums plus deposits were up 55% and the quarter, while net premiums and our global re business grew up grew over 32%.
And so.
<unk>.
We continue to capitalize on a hard ore firming market for commercial P&C and most areas of the world.
Both growth and margin expansion are 2 trends that I am confident we will continue our organization is firing on all cylinders, we're growing our business.
And some door exposures and we continue to expand our margins our leadership and employees are energized and driven to win I couldnt be more proud or humbled by the results. They are producing and I want to thank the more publicly for their efforts.
I am confident and our ability.
<unk> and perform and and deliver strong sustainable shareholder value I will now turn the call over to Peter.
Thank you Evan and good morning, first I'd like to acknowledge Phil Bancroft, almost 20 years of service and leadership with the company and <unk>.
Excited to be on my new position and build upon all that he has achieved.
And doubt although was achieved under his leadership and I'm honored to be leading the very strong team. He has built going forward.
Turning to our results.
We completed the quarter and and excellent financial position and continued to build upon our balance sheet strength.
We have over 75 billion and capital and a double a rated portfolio.
<unk> cash and invested assets that now exceeds $123 billion.
Our record underwriting and investment performance produced strong positive operating cash flow of $3.1 billion for the quarter.
Among the capital related actions and the quarter, we returned $2.3 billion to shareholders, including.
<unk>, 1.9 billion and share repurchases and $352 million and dividends.
Through the 6 months ended June 30, we returned $3.1 billion, including $2.4 billion and share repurchases and dividends of $704 million via.
And we recently announced a onetime incremental share repurchase program.
Program of up to 5 billion through June 22.
As Evan said adjusted pretax net investment income for the quarter was a record $945 million higher than our estimated range benefiting from increased corporate bond call activity and higher private equity distributions.
<unk>, we increased the size of our investment portfolio by $2.4 billion and the quarter after buybacks due to strong operating cash flow and high portfolio returns, including $694 million and pretax unrealized gains from falling interest rates.
At June 30, our investment portfolio.
Remained and and unrealized gain position of $3.3 billion after tax.
During this challenging investment return environment, we will remain consistent and conservative and our investment strategy and do not expect to materially adjust the portfolio asset allocation over the near term.
We will be selective, but active and we will continue to focus on risk adjusted returns and we will not reach for yields.
There are a number of factors that impact the variability and investment income, including the amount of operating cash flow available to invest the reinvestment rate environments and the assumed prepayment speeds on our corporate bond calls and variability.
<unk> around private equity distributions.
Just on the current interest rate environment, and a normalization of bond calls and private equity distributions. We continue to expect our quarterly run rate to be approximately 900 billion.
Our annualized core operating ROE and core operating return on tangible equity were 11.
<unk> on a percent and 17, 7% respectively for the quarter.
And as a reminder, we continue to present, a fair value Mark on our private equity funds outside of core operating income as realized gains and losses instead of net investment income as other companies do.
The gain from the fair value Mark this quarter of 712.
Finally, and after tax would have increased core operating ROE by 5 percentage points to 16, 5%.
And core operating income by $1.59 per share to $5.21.
Book and tangible book value per share increased by 4.2% and 5%.
12%, respectively from the first quarter.
Due to record core operating income and realized and unrealized gains of $1.4 billion after tax and our investment portfolio, which again, primarily came from declining rates and mark to market gains on private equities. The increase in book value per share also reflects the impact of returning.
Returning over $2 billion to shareholders and the quarter.
Our pre tax P&C net catastrophe losses for the quarter were $280 million principally from severe U S weather related events.
There was no overall change to our aggregate COVID-19 loss estimate.
We had favorable.
And prior period development and the quarter of $268 million. This included a charge from molestation claims of $68 million pretax compared with $259 million and the prior year <unk>.
Excluding this charge, we had favorable prior period development in the quarter of $336 million pretax split approximately 30%.
<unk> and long tail lines, principally from accident years, 2017, and prior and 70% short tail lines.
For the quarter, our net loss reserves increased $1.1 billion in constant dollars and are paid to incurred ratio was 80%.
Our core operating effective tax rate was 15.8.
And for the quarter, which is within our expected range of 15% to 17% for the year.
Now I'll turn the call back over to Karen.
Thank you at this point, we're happy to take your questions.
Ladies and gentlemen, if you would like to ask a question. Please signal by pressing star 1 on your telephone keypad just keep in mind if.
And 8 proceeding a speaker phone and make sure the meat functions released so that simple from each of our equipment. Once again star 1 for questions. We will begin with Michael Phillips with Morgan Stanley.
Thanks, Good morning, Evan and thanks for all the comments on.
First question is on growth I guess, maybe specifically North America commercial lines.
Sure.
Are you pleased with the growth there relative to the rate youre getting and I guess.
And what I'm, what I'm, implying and how much of the growth youre getting this to market share gains versus.
Versus just on alright.
Well.
I think it's a I think it's a serious.
Combination of both.
Just heard me.
Just heard me.
Baidu new business growth rates.
And strong renewal retention rates.
And that means exposure growth.
That means and <unk>.
<unk> market share.
And so.
All in.
Very.
Very strong growth.
Fundamental growth and the business.
And by the way actual exposure growth.
With.
Negative and in the quarter.
And.
But new business and renewal retention and rate.
Oh, well overcame that you saw a 21% growth and commercial P&C.
Okay.
Thanks, Evan and stay.
And with North America commercial lines and see.
And core loss ratio relative to <unk> was up a little bit and was there some impact from portfolio transfer on the second quarter and or is that just a normal second quarter event that happens and I'm, just wondering what impact that wasn't that and a quarter that may be.
It's just normal.
And as a normal quarter on quarter seasonally <unk>.
There wasn't.
There wasn't.
Some impact from from LPTA year that and the mix of business changes quarter on quarter and Thats.
That's it I think the thing you're more focused on as the year on year change and.
<unk>.
<unk>.
Sure.
It looks pretty strong.
Yes, perfect. Okay. Thank you Evan appreciate it congrats on the quarter.
Thanks, a lot.
We will now take a question from David <unk> with Evercore.
Hi, Thanks, good morning.
<unk>.
Just wanted to follow up on that last question and then just on the day North American commercial loss ratio.
How much of of the 2.4 points year over year improvement was driven by mix versus.
Versus our rate.
In excess of trend.
Sure you're really asking me the question and I want to help you with it of L. P Ts and the impact of writing so much LPT last year versus this year, which can inflate loss ratio last year versus this year.
If you adjust for the LPT impact and.
And a little bit of other onetime noise the year on year combined ratio.
Adjusting for that improved 1.8 points.
Was <unk> 7 on expense and it was 1.1 loss.
Ratio related.
Got it that's that's perfect that's exactly what I was looking for thanks.
And thats good to see that accelerate a bit from the improvement last quarter.
I guess just another question just overall on the expense ratio.
Sure.
Maybe this is also on for Peter I think and in the past you've talked about some of the improvement being driven by some non sustainable.
Covid related impacts for Kenny.
Things like that.
Did that come and did that come.
Backs those are there's 1 times net impacts or are we still realizing some sort of benefit from that.
No you are fundamentally looking overall.
A pretty good run rate.
And you know look at from if things opened up more and as they open up more and there'll be.
More travel related expense little more entertainment related expense, we don't we don't anticipate it to have.
A big impact on.
Immaterial impact.
Do you look on a pretty good run rate there and.
And that's on the Opex ratio remember the.
The acquisition ratio bounces around with mix of business.
Right Yep perfect. Thank you.
You got it David.
Our next question will come from Greg Peters with Raymond James.
Good morning so.
Questioning will focus on just the pricing commentary.
You really laid out some very robust results in terms of price achievement, not only and the recent quarter, but really for the last almost 2 years.
And in your press release, I think you said.
And the first competent these market conditions will continue so I have and you know where I'm and go with this which is there's yeah, there's growing <unk>, Italy, and Greg Theres, a lot, but I don't know where youre going go ahead well.
It's kind of it's a listen there's a lot of rhetoric and the market that the rate environment is going to start to soften and so.
So where I'm going with it is from where you sit today youre, producing and 85 per cent combined ratio that's pretty darn good.
It is yeah, we're gonna be and environment say 2 years from now where we're back to net.
Negative rate increases across many lines of commercial or.
You asked about your views on how you see the market developing.
You know look I can't tell you.
What we're going to see 2 years from now.
I can give.
Give you a sense.
And my own judgment, because I don't have a crystal ball.
Based on the cash.
Current market conditions.
And where I think they are going over the medium term right now.
I think last call I think rates will continue to exceed loss cost.
Exceeding loss cost right.
Now.
And by a reasonable margin.
And the industry overall forget chubb the industry overall.
Has been number 1 achieving loss rates in excess of loss costs for just 2 years now.
And.
Secondly, the industry starts at a loss ratio that is that is quite high and to achieve a reasonable risk adjusted return it has to continue to achieve.
Right and.
Excess of loss costs.
A prolonged period of time.
Interest rates are so low there is no joy on the other side.
And then you have.
And the external environment.
Is that has you know has risk around it from.
Cyber and climate to the litigation environment.
And.
All of that is baked into I think the mood and the thinking.
Among those and the industry underwriting today.
And so in my judgment from everything I see it is natural that.
You know <unk>.
I gave you year on year.
Movement in pricing and rate.
Yeah.
You would have a perspective and as you think about the rate of increase declining going forward.
That is natural.
Cheryl.
But it's well in excess of loss cost and I believe that will continue.
Perfect.
But to a good question that I think deserved.
On a fulsome response.
And.
And your comments.
Thats about loss cost or are interesting because there's too and you mentioned litigation. So there is a perspective that the legal environment because of Covid was shut down last year and thats going to come back in Spades and then the second piece on loss costs as there is all those rhetoric.
Rick about inflationary pressures, especially on things like auto and do you see that sort of manifesting itself in terms of higher loss cost for the industry as we think about the next 12 months.
Yes, so here's how I see it.
When we look at the long tail lines were used.
<unk>.
On.
A historic trend, ignoring COVID-19 and the shutdown and.
Assuming a reversion to the mean and which was.
Which was recognizing.
What I think is a relatively hostile legal environment and litigation environment.
<unk> so there is.
The actual at the moment is running better than then the the trend and <unk>, 6%, we are using but but we think thats a head fake and on it.
Timing question and.
And.
And how we.
Imagine.
And trend and therefore, what you really need and pricing.
On the on the short tail side of the business.
It really gave you 2 numbers I gave you.
Homeowners and I gave you a homeowner's running a double digit observed inflation today.
Hi, Gabe.
<unk> will long tail I gave you were short tail commercial.
Hi.
And we're trending at 4%.
On the commercial property side.
From what we see and.
And all of our data.
Currently at the moment, it's actually running below that.
Both frequency and severity, but we see enough of what we see is inflation.
Externally, we see enough of what we see and the homeowners' book that we continue to to 2 trended and both pricing and reserving at that 4% range.
Got it thank you for the thorough answers.
You got it.
We will now move to Elyse Greenspan with Wells Fargo.
Hi, Thanks, Good morning on my first question, Evan going back to some of the pricing commentary you gave it.
Seems.
And most lines on healthy levels above loss trend.
So we've heard from some folks and the industry lines are getting to rate adequate and momentum following and it sounds like really across the board most line.
So we need a rate I guess would you characterize.
And the lines are being laid adequate or just general kind of pushing consistently right across the majority of their commercial lines.
I am not sure Elyse I heard your your your commentary, but I'm not sure I got the question.
And we just wanted to get a sense like broadly across commercial lines and you make your commentary about it still being a third market.
And every line fill and need.
Healthy robust rate increases or any lines, maybe more at adequate levels right now.
Elyse it really varies across the board.
When I look at the industry overall, I think and many classes.
The industry and aggregate if I rolled it all together as 1 big portfolio needs right.
When I look at it for the Chubb portfolio.
Most of our business.
Is at or approaching.
And risk adjusted rate adequacy.
Okay. That's helpful.
Bar as I will go.
That's helpful and it varies by line by territory.
I'd.
Class.
That's helpful. And then my second question on you guys.
Wind up pretty robust on $5 billion capital share repurchase plan last week.
As you think about the opportunity as your excess capital position do you think that.
Should we think about the capital return being prorated over the next year, depending upon where your share price is maybe you could come sooner than later, how are you thinking about share repurchase given the $5 billion and also understanding that you guys bought back a good amount of your share in the second quarter as well.
Nice try.
Lease.
Stay tuned.
Okay. Thanks, Evan.
You're welcome.
Now, we will hear from Ryan Tunis with autonomous research.
Yes.
Hey, Thanks, good morning.
And then 1 observation I guess, we had is the overseas general and segment loss ratio improvement is actually been keeping up pretty well at the North America commercial loss ratio improvement and.
And I guess, it's a little bit surprising to us just given the mix and I was just curious if is.
Is that surprises you as.
As well.
No.
Not at all.
So when you think about.
Overseas General and North American commercial you'd think today have pretty similar margin profiles at this point given.
Pricing conditions.
Well theyre running different combined ratios.
It varies by segment of overseas general by country.
By the mix varies wholesale versus retail.
Right.
And our overseas general continues to improve.
And at a pace, that's very similar to north America's pace.
Got it.
Im a little confused beyond that Ryan and I don't.
And want to help you if I can.
No.
And just overseas general is not a segment, where we've been used to seeing a lot of loss ratio on pulling from.
<unk> on time.
I thought that was more attributable to the A&H and mix, but it's been impressive. So I was just.
No no.
It is budd.
And the.
Over half the overseas general business is commercial business.
And.
On a law you havent been in a market, where you take your app or you take the London market, both wholesale and retail.
Soft markets for an extended period and.
We were scratch and dirt for growth, but we were getting growth.
And but we are very.
<unk> disciplined and and underwriting and we were making good money and good margins you know a decent return not off the charts risk adjusted return, but it.
A decent return and relative to the market, we were well outperforming.
Could you have seen and.
And what you get is particularly with Europe, and then with the UK. They are slower to react, but you see that reaction taking place.
And that was just an opportunity for us to drive right now both growth and rate.
Got it and then.
A follow up on our leases question your response that from the Chubb.
Book It sounds like a lot of lines are approaching risk adjusted rate adequacy.
And just from a growth perspective.
You know how much is that driving you know when you.
And the topline like when all of a sudden you see aligned and a year ago wasn't right out equipment and now it is.
Chubb is that a substantial marginal contributor too.
And the topline growth, we are seeing and is it.
More incremental than that.
Okay.
How it goes around here number 1 underwriting.
And we'll never destroy book value So it's running.
And if it's running over 100.
You have to fix it or kill it immediately.
And in this kind of environment if.
If you're you have to strive and your business to achieve.
And adequate risk adjusted return.
And if the market.
And will allow an adequate risk adjusted return on that cohort of business that you are underwriting and I'll tell you what more submissions more quotes and draw and more broker relations more brokers and agents and drive to write that business.
Got it thank you.
We know our mines clearly and.
And.
And that's the point I was really trying to make we've been growing commercial.
Double digit now for 10 quarters, no one's really noticed that.
And.
And that's because.
Our kit.
We saw and improving and an improved environment.
Short of that you know, how many years, where people, saying Oh show us the benefit of Chubb and Ace coming together and this and that we said, it's about underwriting discipline and it's about our market.
And environment now Youre surprised to see it don't be.
Yeah.
And you still they run.
As a reminder, everyone and as star 1 for questions, we will now move to Tracy.
And then.
<unk>.
Please go ahead.
Good morning, I'm going to give you a breather on pricing and loss trend on.
And there isn't a lot of marketing.
No problem.
And I don't know if you license question, but theres a lot of market attention paid your century subsidiary with respect and the BSA bankruptcy.
And volume for these and run off not made and not guaranteed and not part of and intercompany Paul So I'm not trying to box you and on the BSA side, but I'm wondering structurally could you conceivably, let that entities assets run dry or could there be circumstances that you may see radically be under.
Since that obligation to contribute capital I mean, I recognize that centuries regulated by Pennsylvania, which is also a group supervisor.
Tracey and our.
10-K.
We have fulsome disclosure.
Around century.
Free and our obligation.
It is under a statutory order.
Negotiated buys and.
And and consummated between Sigma.
And the state of Pennsylvania before.
Ace.
Purchased Cygnus P&C.
Business, which included century.
And that 10-K disclosure around our obligation to century speaks for itself.
<unk>.
It's quite clear and.
And it is a limited obligation.
And.
And.
I will leave it at that.
Okay great.
And I also recognize that Bermuda as opposing and she's seven's tax proposal in theory, if there's a minimum 15% global tax rate floor holds how would you be thinking about chubb seating arrangement with overseas affiliates.
I would how would I think about what.
What about it from your seating arrangement, yeah, your seating arrangement and with all of our Zillow regiments, Yeah, you know.
We.
We cede risk.
4.
Moving on capital efficiency purposes.
That's the reason we do it we don't do it for tax purposes.
I'll give you a very simple example, so youll get it really clearly.
Imagine that and that on chubb's balance sheet I can take 10 million net per risk on a given class of business.
But imagine that and all the countries, we do business in and around the world I can't take that kind of retention because of my limited amount of capital if I tried to take it and each jurisdiction and I had a loss and Malaysia are at a loss and X Y Z country I'd have to be dividend ing out of 1 place.
Contributing capital and another it's the most inefficient way to run a business so the pooling of risk.
Hum and internal reinsurance is what allows you to leverage our global balance sheet to the benefit of local operations and it.
Provides and 1 place the stability of spread of risk against and amount of capital. So that's the fundamental reason that.
And that you start with the Chubb uses internal reinsurance thanks for the question Tracy.
And Ken.
Okay.
Our next question will come from Brian Meredith with UBS.
Yes, Thanks, Evan just curious.
Big $5 billion share repurchase authorization, you announced does that all indicate kind of what your view is of inorganic growth opportunities here.
Opportunities or at least your.
Right.
No.
Hum.
Nothing has changed steady as she goes.
Okay.
Yes.
We're disciplined everything I've ever said about M&A, we are disciplined money doesn't burn a hole in our pocket.
Appetites and it has to it has to advance what we're doing strategically it has to be good for shareholders in terms of value creation.
All of that nothing changes.
Our.
Earnings generation power as we see it.
Our current capital position and surplus capital.
And.
Together.
Led us to the decision.
Right.
And the right thing to do and the prudent thing to do just walking the talk we've set about will hold capital and <unk>.
April flexibility for risk and growth organic and inorganic and we.
We will return other than that to shareholders. So all we're doing.
Great. Thank you and then and Evan.
Question here.
They're fairly meaningful player and the cyber and <unk>.
Lawrence marketplace and just.
Just curious can you give us kind of your thoughts on on that marketplace right. Now I know there were some issues with losses last year, but understand that the pricing environment is pretty good right now and just your view of opportunities there.
Yes look the pricing environment is is is is pretty good.
But that's not.
That's not.
That is not addressing.
By itself the fundamental issue that the industry has to Russell.
And.
Chubb is beginning to respond to but others are.
Were slow to react to.
Those are the fundamentals around cyber.
<unk>.
Pandemic.
Ciber has.
A a.
And catastrophe profile to it.
And the nature of Cat.
Potential.
And that has no time, nor geographic boundary to it.
And you take the growing digital interconnection of the world today.
And everything.
Personal and business.
And that potential for catastrophe the concentrations of exposure are only growing.
And.
And you see the.
And the specter of risk raising its head.
And all the cyber attacks we see.
Malicious cyber attacks, both both nation state and non nation state actors for various reasons, 1 to disrupt society another to make money.
And so you have a frequency of loss on 1 hand.
And right and some some some adjustment to coverage.
And manage that.
On the other side of the coin you have a systemic nature of this and.
And and I can tell you and the.
And <unk> Chubb underwrites, we are facing it and.
And we are beginning to address it and then.
And on the and in underwriting and then on the other side are the real public policy questions and we are involved in raising our voice and the public policy Arena number 1 when you look at ransomware.
While I don't think the government should outlaw ransom.
Where payments at this time.
I do think that we ought to be looking at whether we allow crypto payments.
I do think the nature, because who you're paying terrorists.
Secondly.
Treasury right now you should require should you should be obligated under under current laws anti money laundering laws to get to get permission to make a ransomware payment we should be removing the incentive out of the system.
For ramp somewhere attacks, which are all about money for the most part and on mask what is the social or the.
And the intention to disrupt our country politically and on mass that part of it and show. It secondly, there are all kinds of things that the private sector and public.
<unk> sector could be doing together sharing of information is 1 of them right now and understanding where systemic risk aggregations are is another.
So I'll stop right there, but it is more than about achieving rate and cyber today.
Thanks Evan.
Sorry, Brian.
More than you expected, but.
We have clear views about this.
And as a reminder, star 1 if you do have a question we will now hear from Meyer shields with <unk>.
Good morning to I guess small ball questions Evan.
And you talked about the Gen.
General expense ratio, but was hoping you could give us a little color on what drove the actual decrease and administrative expenses and.
North American commercial year over year.
Oh, My God, William Meyer, how about we take that 1 offline with you and we will.
We will go through the year.
Counting.
Brian.
And there was nothing.
And there was nothing substantial.
Okay fair enough.
And the same sort of tone other income or expenses and North American Marshall.
That was negative 14 is there anything unusual in terms of whats.
And building up to that number.
No nothing unusual.
And within that it's just noise.
Quarter on quarter to quarter noise.
Okay perfect. Thank you.
Youre welcome.
And with no additional questions in the queue I will turn the call back over to your host for any additional.
Losing remarks.
Thanks to everyone for your time and attention. This morning, we look forward to speaking with you again next quarter have a great day.
Okay.
Ladies and gentlemen, this will conclude your conference for today. Thank you for your participation and you may now disconnect.
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