Q1 2022 Chubb Ltd Earnings Call
Ladies and gentlemen, please standby.
Good day and welcome to the Chubb Limited first quarter 2022 earnings Conference call. Today's conference is being recorded if you would like to ask a question. Please press star one on your telephone keypad.
Now for opening remarks, and introductions I would like to turn the call over to Karen Beyer Senior Vice President of Investor Relations. Please go ahead.
Thank you and welcome to our March 31, 2022 first quarter earnings Conference call.
Our report today will contain forward looking statements.
Including statements relating to company performance pricing and business mix.
Opportunities and economic and market conditions, which are subject to risks and uncertainties and actual results may differ materially.
Please see our recent SEC filings earnings release, and financial supplement which are available on our website at investors Chubb Dot com for more information on factors that could affect it.
We will also refer today to non-GAAP financial measures reconciliations of which to the most direct comparable GAAP measures 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.
Also with us to assist with your questions. This morning are several members of our management team and now it's my pleasure to turn the call over to Evan.
Good morning.
Got an excellent start to the year with record per share operating earnings and underwriting results.
All digit global P&C commercial lines premium growth accompanied by rate increases in excess of loss cost.
And improving growth in our consumer business globally.
Core operating income in the quarter was $1.64 billion or a record $3 82 per share up 52% on a per share basis over prior year.
In the quarter, we produced simply outstanding underwriting results.
1.2 billion of underwriting income was more than double prior year with a combined ratio of 84.3.
Both records, our P&C current accident year combined ratio, excluding catastrophes was 83.5%.
1.7 point improvement over prior year with about one point from loss ratio improvement and the balance expense driven.
On the investment income side.
Net investment income was circa 900 million for the quarter.
We are predominantly a buy and hold fixed income investor.
And given rising interest rates the widening spreads we expect investment income to increase from here.
Every 100 basis points increase in interest rates for us is worse on an annualized basis about $1 2 billion on Greek and pre tax investment income.
We have a portfolio duration of about four years. So a rise in rates begins to earn in reasonably quickly.
Pedro Peter will have more to say about other financial items.
Let me say a few words about the Russia and Ukraine War.
The events unfolding before our eyes are a human tragedy of epic proportions with.
With profound geopolitical implications.
Our actual incurred losses to date from the event are de Minimis.
And from all we know today.
Additional losses may develop over time.
It will not represent a meaningful event for Chubb.
Integration planning around the Cigna transaction is quite active and remains on track.
We expect to receive regulatory approvals leading to close during the second quarter.
There are no changes to the substance of the guidance we gave you.
And any changes or modestly positive.
We will update you after closing.
Now turning to growth the rate environment, and inflation global P&C premiums, which exclude agriculture increased eight 8% in the quarter on a published basis.
Or 10, 7% in constant dollars with commercial up 12% and consumer update.
Growth in the quarter was broad based with contributions from virtually all commercial businesses globally.
From large corporates and middle market to small.
From traditional this specialty in most all regions of the world.
Commercial P&C premiums, excluding agriculture for North America were up 200.5%.
Well in overseas General they grew 13 in constant dollars, but we then had five points of FX impact to the published result.
Agriculture premiums were down in the quarter because of a return of premium to the government.
It was based on our level of profitability for the <unk>.
<unk> one crop year.
This is a favorable unexpected development.
You will recall the crop insurance is a business where revenue and losses are shared with the government.
So the 22 crop year, we will have a substantial increase in premium revenue over last year.
Given commodity prices and other factors most of this will be recognized in the third quarter.
Returning to commercial P&C in terms of rate the level of rate increase remains strong and as I have said before.
Naturally moderating as individual portfolios achieve adequacy and additional rate.
Is then required to keep pace with loss costs.
The rate environment is reasonably orderly.
Aggregate rate increases remained in excess of observed in projected loss cost.
In the quarter in North America total P&C premiums, excluding agriculture grew nine 6%.
Again with commercial up 10 and a half.
Growth this quarter in commercial lines was led by our middle market and small commercial business with premiums up almost 12%.
Followed by our major accounts and specialty Division grew nine 5%.
Total exposure change was a positive one point in the quarter.
A combination of an increase in economic exposure of about three 2% due to higher payroll sales and other economically sensitive activity.
And on the other hand, a declining exposure due to underwriting changes.
Such as increased attachment points and higher deductibles.
It's a good thing.
Renewal retention for our retail commercial businesses was 100% on a premium basis very strong.
Overall rates increased in North America commercial lines eight 7%.
Major accounts, which serves the largest companies in America rates increased 9.3 Gen.
General casualty rates were up over 15.5% and vary by class of casualty, while risk management related primary comp and casualty related rates were up three 7%.
Property rates were up 9.1.
The natural lines rates were up 13, 9% and varied by sub category.
In our E&S wholesale business rates increased by more than 11% rates.
Rates were up $13 three in casualty about 10%.
Oh, sorry in property casualty was up 10% and financial lines rates were up 15 four.
And then our middle market business rates increased seven 7%.
Or nine and a half excluding comp.
Rates for property were up over 8%.
Casualty rates, excluding comp were up eight and a half.
Comp rates were down one and a half.
The comp pricing, which is rate class exposure was up over 9%.
Finally financial lines in middle market were up 17%.
We are trending loss costs at 6% and it varies by line.
In general we're trending loss costs in.
And the rates, we charge for short tail classes, just over six 5%.
So the actual is running lower.
In long tail, excluding workers' comp, we continued the trend of the 6% rate overall and.
And our first dollar workers' comp book is trending between four and four 5%.
Short tail classes, we are actively monitoring property valuations.
Loss costs as they develop.
The real time drivers of cost for changes in inflation.
Labor parts and supplies as well as the delays caused by supply chain disruptions given the length of time to repair or replace.
Can add additional pressure on costs in long tail lines, we actively monitor and study both frequency and severity of each class.
Turning to our international General insurance operations retail commercial P&C premiums grew 15, 5% in constant dollar.
While our London wholesale business grew just over five and a half.
Retail commercial growth varied by region.
Premiums up 18, 5% in Latin America, followed by growth of about 16, and a half in our U K and Europe Division and.
Asia Pac was up 14 and a half.
Internationally like in the U S. We continued to achieve improved rate to exposure across our commercial portfolio.
For our international retail business rates increased in the quarter, 10%.
Well when our London wholesale business rates increased nine both vary by class and by region as well as country within region.
Outside North America loss costs are currently trending about 4% so that varies by class of business and country.
General loss cost for short tail classes are running just under 4% and we anticipate this to increase in long tail. We are trending at about a four 5% rate.
International consumer lines growth in the quarter continued to recover from the pandemic impact on consumer related activities.
Premiums increased about nine 5%.
Oh, FX, then scrubbed six points offset to grow off the growth rate.
Premiums in our international A&H business grew eight 6% in constant dollar.
While our international personal lines business grew over 10.
Latin America led the way with A&H and personal lines growth of over 18.
17, 5% respectively.
Asia Pac's growth for these two product lines was over six and 24, 5% respectively.
Net premiums in our North America high net worth personal lines business were up about seven 5%.
Last year's reinsurance reinstatement premiums due to cat losses had a negative impact on growth.
Adjusted for that was the other one time items, our underlying growth was about five and a half in the quarter.
Our true high net worth client segment.
Part of our business grew over 13% in the quarter driven by a flight to quality of competitors, leaving certain markets. While overall retention was very strong at nearly 99%.
Our homeowners business, we achieved pricing.
Includes rate and exposure of 12, 3%.
While homeowners loss costs are running in the 11 range.
In our Asia focused international life insurance business.
Net premiums plus deposits were flat in constant dollar.
It will increase in future quarters.
While net premiums and our global rebid sniffs were up 22%.
In sum, we had an outstanding quarter, all around and we are off to a great start to the year.
I look ahead, I remain optimistic and confident in the things we can control.
They have naturally grown more cautious given the world around us.
Economic growth.
General inflation and Central Bank actions and the war comes to mind.
We will continue to capitalize on favorable underwriting conditions for our commercial P&C business globally.
Consumer lines growth to continue to recover.
As interest rates rise our investment in a mill as well.
And as I stated last quarter, our strategic investments.
The acquisitions of Cigna.
Likely later in the year, what Ty will provide us with greater revenue and earnings growth opportunity.
I'll now turn the call over to Peter and then we'll be back to take your questions.
Good morning, everyone.
As you've just heard from Evan we're starting the year with an exceptional quarter with strong top line growth and record P&C underwriting results that produced operating cash flow of $2 4 billion for the quarter.
Turning to our balance sheet and capital management or.
Our financial position remains exceptionally strong with $73 billion in total capital.
We continue to remain extremely liquid with cash and short term investments of over $5 billion I would note S&P and Fitch, both reaffirmed our double a ratings and stable outlook, reflecting our strong financial position.
Among the capital related actions in the quarter, we returned $1 3 billion or 82% of core earnings to shareholders, including $1 billion in share repurchases and $340 million in dividends.
As of March 31, $1 $6 billion of the $5 billion share repurchase authorization remains available through June 30, we plan to seek authorization from our board for annual share repurchase program prior to that date.
During the quarter rising interest rates caused a mark to market pretax unrealized loss of $4 7 billion.
We're four 5% of our fixed income portfolio.
As a comparison the Barclays Global aggregate Bond index declined by six 2% for the quarter.
This adverse mark to market movement of $3 8 billion after tax or six 5% of our book value drove the decline in book and tangible book value per share of $4, four and six 8% respectively.
Excluding the unrealized mark to market in the investment portfolio book and tangible book value per share increased by two 1% and two 9% respectively.
As noted in our supplement the market rate on our fixed maturity portfolio was three 4% for the quarter and exceeding our book yield of 3%.
As of last Friday, the market reinvestment rate had increased to three 8%.
Reflecting this rising rate environment, we now expect our adjusted investment income for the second quarter to be in the range of $915 million to $925 million and then it will go up from there.
Our reported ROE for the quarter was 13, 6% and our core operating return on tangible equity was 17, 1% our core operating ROE was 11, 3%.
Pre tax catastrophe losses for the quarter were $333 million, including $138 million for Australian storms $65 million for wildfires in Colorado and $130 million for other global weather related events.
We had favorable prior period development of $240 million pretax essentially all in short tail lines of $228 million, principally in A&H property and surety.
Our paid to incurred ratio for the quarter was 91% or 80% after adjusting for cats and prior period development.
Our core operating effective tax rate for the quarter was 16, 9% and we continue to expect our annual core operating effective tax rate for 'twenty two to be in the range of 15, 5% to 17, 5%.
Now to finish with a couple of discrete items.
Relative to our exposure in Russia are Russian entities have been separated offer operationally from Chubb and are managing their affairs independently and have been deconsolidation during.
During the quarter, we impaired the full carrying value of these entities and recognized a realized loss of $87 $87 million.
Relative to Cigna, we have amended our purchase agreement to remove the joint venture in Turkey.
This amendment will have a de minimis impact on the transaction as Evan mentioned, we will provide an update with more specifics on the acquisition during the second quarter earnings call I will now turn it back to Karen.
Thank you at this point, we'll be happy to take your questions.
Ladies and.
If you'd like to ask a question. Please signal by pressing star one on your telephone keypad keep in mind. If you are using your speaker phone. Please make sure. Your mute function is released so that students can reach our equipment.
Once again star one for questions.
We will begin with your own Qunar with Jefferies.
Good morning.
And congratulations on the quarter.
I know I've asked similar questions in the past so I hope you have a little bit of patients at this time round.
You have.
The investment environment, adding 150 basis points ROE if for every 100 basis points of interest rate improvement.
The loss ratios look great.
Still earning well over trend at what point do you start taking the foot off of the b rate pedal or go after more exposure as opposed to pushing for rate.
We don't think of it that way exactly I mean first of all.
The market.
Itself as a governor on rate, we're in a competitive market.
We pursue the rate, we think we need and that actually it's the other way around that actually determines.
The outcome of growth.
We're underwriters first and the rate we require for both.
Exposure and adequacy of rate to exposure.
Inflation as part of that.
That's the that's the starting point for us.
Okay.
And then my second question.
I think for the last several quarters, if we look at the <unk>.
Rate environment, Internet and commercial internationally its been higher than in North America, yet the loss trends are lower internationally can.
Can you maybe help us think through why that would be is it because of the lower interest rate environment overseas or are there other drivers there.
Well you know what you have 55 countries that we're operating in around the globe. So there is no.
One neat simple answer.
On the long tail side, most countries don't have the kind of.
Legal environment.
We have there were a few that come to mind that are similar like Australia, and the U K the balance it's a much lower.
Inflationary environment on loss cost for long tail lines of business and then short tail it really varies by jurisdiction.
Europe is very different than Australia, which will be very very different than say, malaysia or or Korea in terms of <unk>.
<unk> supplies and the nature of short tail losses. So it's a it's a mixed bag.
That's why we're on the ground operating locally in every jurisdiction around the world, We know the markets where part of the market.
And so we we approach from the idiosyncrasy syncrisis of that local market, when we think about adequacy of pricing and underwriting.
Thank you very much.
Youre welcome.
Well now move to our next question, which will come from Michael Phillips with Morgan Stanley .
Hi, Thanks, good morning.
And then as you just said you're part of a pretty competitive environment.
That kind of a government given given the decelerating rate environment for the industry and.
And I think it's pretty unique times with loss trends that are accelerating pretty rapidly.
Do you think there is.
An opportunity for that for the industry to find pockets where rates will actually convert an accelerated again sooner than they otherwise would have.
Okay.
Look it's certainly possible.
That reflect as losses in certain areas or exposures.
Hum increase.
Certainly the industry and you see it different in different areas.
Look at personal auto right now.
Industry responds looked at commercial auto industry responds look at cyber industry responds so as loss costs.
Show themselves or the Spectre is on your doorstep.
The industry.
Does respond.
Look at that property property continues to increase.
Overall, a double digit rate part of that is a reflection of rethought revised views of cat exposure.
Given climate change and.
That is pretty universally recognized by good underwriters and model changes that drive inflation than loss cost. So.
Yeah.
I'm answering your question.
By giving you facts that I think make itself out of it.
Okay. Thank you Evan.
This is more for actually for you in your book.
And specific to your North American commercial lines book when you look at that book, Kevin Do you step back and say Gee I wish we had more of this or.
Either either theres holes of opportunity and it holds its too stronger word, but pockets of opportunity in either size of accounts or lines of business, where we're I wish we did more of this in north American commercial lines.
You know.
It's more of a personal question as you.
If you know me you'd know my natural stages not addressed.
And.
And we.
We're an ambitious group.
We have.
You know, let's call it 1% or less of the global insurance market.
Were rounding error or still in that regard.
Plenty of growth opportunity for this company.
And we're not Bruce.
Brewery under at everything we do there is plenty of opportunity to improve ourselves.
So.
We're on an endless Hajj.
Okay. Thank you.
Thanks.
Now moving to Greg Peters with Raymond James.
Good morning.
So the first question I know you mentioned this in their comments and then in your letter the political the war political tensions locked down supply chain issues. I think you mentioned in your letter.
The potential for a new world order.
So my.
My question is.
This strategy difference of being a global reinsurer and not reinsure, a global insurer versus being more having more of a regional focus and I'm wondering if that narrative has changed are you or you're thinking has changed because of.
All of these wild swings and what we're seeing in the press and in reality.
No nothing.
Nothing has changed.
We take eight.
You know I.
Take a medium term and longer term view.
Of opportunity and strategy when we think about <unk>.
Growth for the company.
Let's take Asia.
Asia.
Is were probably more than one half to two thirds of the world's growth will likely take place over the next decade, two decades and longer out.
Chubb's presence and increasing presence there.
<unk> is a good thing.
It will allow us to capitalize.
On those opportunities and that means that's where the insurance industry is going to grow.
When I think about <unk>.
Latin America.
Yeah, It has a volatility signature to it.
That is that is more extreme.
But we recognize that in how we approach the business, but the trend line over time.
Is increased growth opportunity.
For a number of reasons in particular.
And so no it doesn't give me.
Pause for thought on the underlying.
Pieces.
But the world goes through periods of greater volatility and risk and some times a little less Hugh you recognize that and you build that into your thinking when you approach your strategy and tactics.
How you exposed your company.
But it is a it is a a natural.
Consequence of of the.
The strategy you take on when you go global.
That you will expose yourself I would also say this I don't think that any country or region of the world given the interconnectedness of the globe is immune.
Certainly not immune or at home.
And if you are in the United States as a U S only insurer.
Insulated yourself from the global issues by any means just look at inflation.
And and and by the way the war in Ukraine, we saw.
Fiber that goes across border so.
We all live on the same planet nowhere to hide Budd.
[laughter] good point.
Peter.
Your comments are you you talked about the capital returns.
In the quarter I think you said 80 plus percent of the earnings was returned to shareholders.
When we think about how obviously, it's going to ebb and flow between quarters, but is that sort of like the general framework that you guys are thinking about absent some major M&A opportunity on a go forward basis.
No I'd say that was just an outcome I was indicating and we have a capital framework, which <unk> been clear on the past which is we.
We will hold capital for risk and opportunity and returning capital beyond that to.
Shareholders. So we will reauthorize with our board's permission a new program in the second quarter and we'll report on that on that basis, but there is no change to <unk>.
Anything in that 83% or 82% was an outcome.
Got it thanks for the answers.
We'll now hear from Elyse Greenspan with Wells Fargo.
Hi, Thanks, Good morning, Evan in your annual report you also talked about.
Keeping an ROE of about 13% in 2023 and kind of heading north from there. So when you make that statement. How are you thinking about the rate versus trend environment, playing out over the next couple of years.
Do you see us still a good glide path for <unk>.
We didn't wait to wane in excess of loss trend.
Well.
I didn't.
We did all our inputs I'm not lease I'm not going to.
Go to specific items, but all of them are our own view of market outlook.
This base is baked into that.
But.
Glide path I think is right.
That.
That rates will.
Continue to moderate but.
With an asterisk on it it depends on the <unk>.
Line of business.
And it depends on the loss cost environment.
And I would expect that the industry would respond.
And then keep in mind.
If there are if there were any classes where rates are in excess of that.
<unk>, which is required to earn an adequate risk adjusted return on capital.
Then you.
You might see in some of those classes and Youll see it you always see it you see it now.
That there is a little weak give back.
Which is natural also so we imagine.
In a word.
Fairly orderly.
Marketplace.
But it's a marketplace and we also know a marketplace always has.
Certain signature of chaos to it.
<unk>.
Ed.
Thats baked into our thinking.
Okay and then.
In terms of growth rate you guys saw almost 11% global P&C, that's ex AD growth in the quarter, obviously there was.
Some impact of FX, there, but as we think about the global economies improving consumer is bouncing back would you expect.
Premium growth remain kind of within that level or perhaps pick up from here.
Nice try at least you know I do.
Don't give forward guidance.
But I remain quite confident in chubb's ability to outperform.
Okay, but am I right in thinking that consumer just has some tailwind right just given the environment and the headwinds that that business I guess has faced over the past couple of years.
Yeah, I think youre reasonably right it varies by region, but you see the trend followed the footprints.
<unk>.
And where we have been growing quarter on quarter.
And.
And I think thats reasonably good way to think about it.
Okay. Thanks, Kevin.
Youre welcome.
Our next question will come from David <unk> with Evercore ISI.
Hey, good morning.
And then I just had a question a bit on the exposure change specifically in North American commercial it sounded like that detracted around two points from.
Growth this quarter, which obviously I close to 11% with still good but I'm wondering if you could talk a bit more about some of the underwriting actions that you've been taking I know this is something you're constantly work on but it feels like it was a bit more of a concerted effort or it has been more of a concerted effort over the last year or so.
Just wondering where we are in this exposure management.
And.
Is this something that is going to continue to be a drag going forward are we through most of it.
And maybe secondly, if we could think about how to quantify the benefit to margins from these changes.
Whether that be on both underlying or cat load.
Yeah. So I think David you you didn't get it quite right it didn't detract two points in.
In fact, it added about one point.
What I gave you was one point of exposure growth in commercial lines North America.
I told you about three two points of that was economic.
And then there was an offset from underwriting, which we can measure and that it was a change in terms and conditions.
Deductibles et cetera.
And it's not.
It's not some event over the last year, it's over a more extended period of time.
In the <unk>.
In the hard market.
You can one of the.
The tools you have on that.
Clients want because they are getting a lot of price and rate increase did.
The polls and attachment points as an example.
Don't move for years during the softer part of the market cycle yet inflation.
Is relentless even if it's two points or three points year on year on year on year.
So what a million dollar deductible was worth 10 years ago is hardly.
What its worth today.
And so you go and clients in a hard market they understand dollar swap and they don't want to swap dollars.
So.
Hugh you correct for that it's not just rate that occurs there is this rational correction of.
<unk>.
Of structure returns with your clients.
That's the change.
In deductible and attachment points.
As just to cite those particular so.
Giving you that mental model.
In terms of margin.
Nice try.
I'm not going there.
Though we do quantify it.
Quite precisely to ourselves.
And in most classes.
And I think I answered it I wanted to go back on the leases.
At least not to.
Being kg <unk>.
I expect consumer to continue to recover.
And to continue to show improved growth.
The only thing I can't control it.
As a war.
And any area that may go into recession.
But from what I can see right now I expect it to continue to recover.
Okay.
Anything further David.
Yeah, Yeah. Thanks, that's helpful.
And I guess you know.
Have you seen any obviously higher rates higher interest rates is helping.
ROE across the industry have you seen any competitors.
You know picking up their aggressiveness in terms of pricing just as we've had interest rates move higher here or.
Has that.
Obviously, it's still very uncertain environment inflation still.
Very high.
Has that have you have you seen any evidence of of the competitive environment picking up.
David think about it.
Just started rising relatively short period.
Go portfolios have to turn over to actually earlier Dan.
And they moved very very quickly.
And by the way on one side as interest rates and on the other side as inflation.
And the industry needs to stay ahead on installation. So no. The answer is I have not seen that.
Got it thanks that makes sense.
Moving on to Ryan Tunis with autonomous research.
Hey, Thanks, good morning.
I don't want on the Russia, Ukraine conflict Evan.
In the annual letter one thing that stood out to me was the fact that.
Chubb's, a market leader in a lot of.
Political risk classes, you mentioned Bermuda subsidiary I think it's called sovereign risk.
So I guess I was pleasantly surprised but in a good way that losses from Russia, Ukraine were de Minimis. So first part is can you just help us understand how have you managed to avoid losses tied to that and second of all.
What are the types of opportunities Youre seeing.
On the back end of this.
Yes opportunities.
Bob.
Begin to emerge in political risk, but we're pretty conservative and cautious underwriters.
In the class and the way we approach it we know our mines clearly.
Look.
More loss.
May develop in that area.
Can't tell you.
It's like new.
We would've taken.
We would have recognized.
And but given events.
Losses.
And further exposures may develop in the political risk area.
Given.
Confiscations Erects appropriations.
Or inability to use an asset.
We are in touch with all our clients.
And so far to date.
We don't see circumstance.
Individual circumstance that translates.
Awesome.
If it does happen.
Given.
Our aggregate of exposure.
In total because we watch and always have our aggregations like by country.
The industry.
By type whether it is.
It is ensuring that or it's ensuring equity.
It's ensuring currency will convert ability, we're very careful in how we think about the construction that way.
And so.
If there is a loss to emerge in the future I just don't know.
It'll be it won't be a big event for Chubb.
We don't have huge limits on any one client on a net basis.
So in aggregate, that's why I made that statement.
It may develop if it has.
So it happens over.
Extended periods of time.
In the.
The aggregate amounts it won't be it won't be a big event for Chubb.
Understood.
And then my follow up I guess very strong underlying loss ratio improvement in the.
In the commercial segment.
Is it fair to say that pretty much all of that is from the.
Earned pricing versus loss trend dynamic or was there anything else that you would point to that.
It might have made that outsize this quarter. Thanks.
No no nothing no.
It's really you know in long tail lines, you had in the first quarter of the year, it's based off of <unk>.
Loss ratios that you select.
And.
In short tail lines.
Virtually the same and there is nothing we see underlying and there was there were no one time or anomalous items that that contributed.
Very broad.
It was the resilience of it.
And the quality of it I was.
You know I'm gratified to see.
And it's a testament to all my colleagues as the broad based nature of it.
Now moving to publish them with Piper Sandler.
Good morning, congratulations on the quarter.
The 6%.
Loss trend that you were talking about does that include the A&H book I was wondering if you make if theres a difference or you could contrast.
The claims inflation trends youre seeing on the.
The property and casualty pure property casualty book versus what we're seeing on the A&H book in it yes.
Corollary question to that is if there is a difference does that.
The way, we think about sort of aggregate.
Greenhouse trends change from Chubb.
When the.
Close the <unk> deal.
Paul Let me help you with that.
Sure.
I gave you was the commercial lines business and I gave you a short tail.
Included in the commercial loan business.
Very small A&H book.
Actually.
I think you can virtually see the premiums so it hardly swings any stick.
Beyond that I'm not going into any more.
Parts and pieces in fact, I think I was more transparent.
Then then most star who are who are reporting.
So I've gone as far as on the go in terms of individual mines.
But again.
<unk> is largely swings.
Any stick in the.
And the trend numbers.
Because the six was in North America.
And it was North America commercial.
Okay. Thank you.
Youre welcome.
Next question will come from Alex Scott with Goldman Sachs.
Hi, Yeah first question I have for you is just to see if you could describe where you've seen with core reopening and if that's having any impact I guess either positive or negative on just the updated view of loss cost trends that are sort of separate from the CPI type inflation.
What did you just say I'm sorry, what was the first part of that.
Sure I'll repeat it sorry.
I was interested if you could describe what you were seeing with CT reopening.
And how that's impacting the loss cost trends.
They are positive or negative.
We're not.
We're seeing in <unk>.
An increase in frequency, what we would expect with cord openings and we're seeing more adjudication of claims.
Given court openings nothing is impacting trends.
Got it.
And.
Question I had was just on the cyber insurance and I guess, a are you seeing anything there.
And B the the war exclusion common.
Language you have in your policies could you just describe if thats changed at all since sort of 2017 and things maybe you learned from the.
The outcome with Merck.
And whether the the language would be more protective against you.
Vince like what happened in 2017.
First of all let.
Let me work backwards, and then I'm going to come to the first part because.
Let's be precise with each other first of all Merck Merck was not a cyber insurance policy Merck was our property insurance policy.
And I wish those who are thinking about this we're writing about this externally would put their heads around that that it was property insurance not.
Cyber insurance huge difference.
And I hope that helps you secondly.
When you started by saying am I seeing anything there in cyber.
What do you mean by seeing anything there.
Help me and then I'll help sorry have you have you received any claims that are at all associated with the conflict in Ukraine and Russia.
You know the largest.
Single.
Vector territory.
The Tac into the United States.
For the last number of years has been Russia.
Clearly when it comes to <unk>.
Ransomware attack.
More comes out of Russia than any other jurisdiction in the world.
In fact, China is not a source of that China is more of a source the best Vietnam.
And.
So again.
It Hasnt abated.
And it Hasnt increased actually from what we see when we talk to the experts.
Those in the cyber security industry.
Certain changes of patterns that I won't go into but overall it was a hostile environment and it continues to be.
In that regard and has a certain frequency and severity signature to it.
We haven't seen anything systemic.
And I think you probably know that because otherwise you would have been reading about it in the New York Times.
Thanks for the responses.
Youre welcome.
Next question from Meyer Shields with K B W.
Yes.
Thanks, Good morning.
I'm trying to understand with the Sigma business is when or if interest rates rise in those markets does that get typically offset by more aggressive pricing or does that translate into higher returns.
And in which businesses.
The businesses that youre buying from Cigna.
No pricing.
Pricing doesn't really change it it's very independent.
The.
Of interest rate environment. This is not long this is not savings oriented business for the most part.
It is it is fundamentally a risk business.
It's a morbidity business to be clear.
The vast majority of it think about supplemental health related.
Dread disease related.
There is an element to borrow P.
Which is a return to premium product would have the savings element to it but that is.
That's a filed rate.
<unk>.
And it changes very slowly.
No it's not an interest.
Put it in a word Meyer, it's 100 interest sensitive business.
Okay.
And then I don't know if it's too early for us I suspect not has the.
Has kept the crop book changed at all this year because of the commodity prices in other words, the mixed by state by commodity.
No.
It has not we have 20, some odd percent market share in crop in the United States.
Huge tanker.
Boobs pretty slowly if youre thinking about change in.
And any exposure, which in that sense you'd be thinking about.
Change in mix of crop.
Would be thinking about territory change and.
The only change in mix of crop comes in the aggregate.
To the degree that farmers change their behaviors and it aggregates to something significant like a change from corn.
Soybeans et cetera, but we.
We generally see that most every year a.
A bit of that on the margin.
Okay perfect. Thanks, so much.
Youre welcome.
And as a reminder, task a question please signal by pressing star one.
We will now hear from Brian Meredith with UBS.
Yeah. Thanks, Kevin a couple of quick questions here for you first I'm just curious looking at the seeded premium in your North American business up pretty blurred. So on a year over year basis was that just a timing issue or is there something else going on maybe more of an opportunity here to buy some less expensive reinsurance and put some good margin in place.
Always looking for that but no there was nothing there.
There was there was big.
It was just a mix and an anomalous in the quarter it bounce around a little bit as you know.
Got you. Thanks, and then I guess my second question I'm just curious.
At over the next kind of six to 12 months.
Our balance sheet, obviously, a much better shape for a lot of these P&C insurance companies pricing, maybe we're kind of in the seventh or eighth inning whats your view with respect to the M&A environment out there and the opportunities that may be presented to you I know you've got a couple of larger ones internationally.
But I'm sure you've got the capabilities to do do lots of M&A.
Yeah.
Yes.
Yeah.
And I gather you're talking about the industry, Brian My view of it not jump.
Okay.
Yes.
You know I don't have a firm view of battered a clearer view I would say on one hand cost of capital has gone up.
And.
And so the bar goes up.
Most companies or a lot of companies their balance sheet and earning powers in pretty good shape.
And most of the M&A in the industry in my mind.
Again, the word strategic is actually more done out of weakness, where where people feel pressure.
And they want to continue to grow they have a balance sheet hole problem et cetera.
I don't see.
A lot of impetus for M&A.
And in a broad sense.
And theres more risk in the environment right now remember that and so people will be a.
A little cautious.
You'll see where youll see it will be more in small and mid sized.
I doubt you'll see much in the same Av.
The large size, but who the heck knows okay, great. Thank you.
Youre welcome.
Ladies and gentlemen, this will conclude your question and answer session for today.
Going to turn the call back over to Karen Beyer for any closing remarks.
You everyone for joining us today, if you have any follow up questions, we'll be around to take your call.
Enjoy your day. Thank you.
With that ladies and gentlemen, this does conclude your conference for today, we do thank you for your participation and you may now disconnect.
Yeah.
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Yes.
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