Q4 2022 Chubb Ltd Earnings Call
Good morning, My name is Rob and I'll be your conference operator today.
At this time I'd like to welcome everyone to the Chubb fourth quarter 2022 earnings Conference call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
You'd like to withdraw your question again press the star one.
Karen buyers senior Vice President of Investor Relations you May begin your conference.
Thank you and welcome everyone to our December 31, 2022 fourth quarter and year end earnings Conference call. Our report today will contain forward looking statements, including statements relating to company performance pricing and business mix gross opportunities and economic and market conditions, which are subject to.
The 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 <unk> 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 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 <unk>, Our Chief Financial Officer, then we'll take your questions 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 Evan.
Okay.
Good morning.
We had a strong finish which contributed to another record year.
Our quarterly underwriting results were excellent with an 88% combined ratio. Despite a true up to the projected 22 crop insurance full year result.
We had good growth in net investment income that led to a record result.
Double digit premium growth with strong contributions from our commercial and consumer P&C lines globally, and our international life business.
More important the <unk>.
Quarterly results led to what was the best full year financial performance in our company's history, including record operating income on both a per share and dollar basis from record P&C underwriting and investment income and another year of double digit premium revenue growth, including the bed.
Store Ganic growth in our international P&C business in a decade.
All areas of the company contributed to the outstanding results last year, and I want to congratulate and thank so many of my colleagues around the globe.
Core operating income in the quarter was one 7 billion or four O five per share.
Crop results reduced our expected <unk> reduced our expected agriculture earnings by 39 cents per share.
For the year, we produced core operating income of $6 5 billion or $15 24 per share up 21% and again a record.
Quarterly P&C underwriting income of $1 1 billion was impacted as I said by an underwriting loss from crop as we true up our projection for the 22 crop year.
This change of view for the full year result was due to the late season emergence of losses from drought conditions in certain corn belt states.
Overshadowed average to excellent growing conditions and many other areas leading to what we now know.
As a below average year overall for that business.
Agriculture is a weather exposed business with Nat cat like characteristics, it's about growing conditions and commodity prices and each year you start over for the year, we performed well all considered we.
We published at 94, two combined ratio and produced $165 million in agriculture underwriting income.
Back on the quarter, excluding agriculture, the combined ratio was $85 nine and speaks to the strong broad based underlying performance of our business, which produced an amazing 82, 9% ex cat current accident year combined ratio.
Full year P&C underwriting income was a record $4 $6 billion up 23% with a published combined ratio of 87, six and that's with $2 2 billion of catastrophe losses, and what was one of the costliest years yet.
For the industry in terms of cats.
On the investment side adjusted net investment income.
<unk> $1 1 billion for the quarter.
Up about $215 million from prior year, and 4 billion for the year both records.
Reinvestment rate is now averaging five 6% against the portfolio yield of 3.6, and that's translating into annualized run rate growth.
Simply going into the first quarter of 13%, which will continue to grow as we reinvest cash flow at higher rates, our operating cash flow for the quarter and year was $2 7 billion and $11 two respectively.
For perspective, I wanted to touch on capital management as you know our policy is to maintain it.
Is to manage for capital flexibility. After all we are a balance sheet business in the risk business and we are a growth company.
We maintained flexibility for risk and opportunity and return the balance to shareholders simple and consistent policy.
The last two years are instructive, we have organically grown our P&C premiums 21, 5% and that requires capital.
Have deployed 5.4 billion for the Cigna acquisition.
And invested a further one 4 billion and increasing our white-eye ownership together key strategic acquisitions with an emphasis on Asia.
And at the same time, we have returned over 10 and a half a billion dollars of total capital to shareholders through buybacks over 9% of outstanding shares and dividends, all the while maintaining capital adequacy for risk and future opportunity.
And we have capital flexibility given our strong earnings generation power.
Peter will have more to say about financial items, including cats.
Fire period development investment income book value and ROE.
Now turning to growth in the rate environment consolidated net written premiums for the company increased nearly 12% in the quarter on a published basis or 16% in constant dollars.
10.2 billion. This includes growth of nine 8% in our P&C business and over 100% of growth in life premiums, reflecting the addition of the Cigna Asia business.
P&C premium growth in earnings in the quarter were balanced and broad based with contributions from virtually all commercial and most consumer businesses globally.
Agriculture, Aside North America commercial premiums were up almost 9%.
While our high net worth personal lines business was up 6% a very strong result overseas general grew nine seven in constant dollars, but declined 1.3.
After FX with commercial up nine four and consumer up 10 three.
We are a major multinational company and are impacted by currency movements. After reaching a 20 year high in September the dollar has been weakening and that will benefit our growth in the future.
In North America growth this quarter in commercial lines was led by our major accounts and specialty division, which grew nine 1%.
Followed by our middle market and small commercial business, which grew eight seven and renewal retention for our retail commercial businesses with over 96%.
And our international General insurance operations retail commercial P&C grew nine in constant dollar, while our London wholesale business grew about seven and a half.
Retail commercial growth was led by Latin America with premiums up nearly 13% followed by growth of eight and a half in Asia Pac and six and a half in our UK Ireland Division.
In terms of the commercial P&C rate environment.
Pricing conditions remain favorable for most lines of business.
The vast majority of our portfolio.
<unk> favorable risk adjusted returns so like I said last quarter.
In most lines additional raiders required primarily to keep pace with loss costs, which again are hardly benign and both long tail and short tail lines.
To illustrate.
In the quarter pricing for total North America commercial P&C, which includes both rate and the portion of exposure that supports rate.
Increased six 5% with loss costs up six and a half as well now.
Now that's the headline and lets drill down further because I think it's more insightful.
Pricing for commercial P&C, excluding financial lines, and workers' comp was up 10% with loss costs trending six nine.
Breaking P&C down a step further property pricing is firming in response to catastrophe exposures inflation reinsurance pricing and availability.
Short tail pricing was up 14, 7% while loss costs were up six eight.
Property insurance is there an opportunity for us.
And the majority of casualty lines pricing is adequate.
In the quarter pricing for North America casualty was up seven 5%.
While loss cost trends were $6 nine.
Now given casualty loss cost trends rates in most classes need to rise at an accelerated pace there is little to no room for forgiveness.
And here a special mention to excess casualty and auto related liability is warranted for Chubb, our minds are clear and our playbook is consistent.
And some lines like professional liability and workers comp.
Which includes risk management, the competitive environment is quite aggressive and rates have been falling for a number of quarters now and recognition of favorable pricing and favorable experience. However, if not careful the market is in danger of overshooting the mark in.
In the quarter rates and pricing for North America financial lines in aggregate were essentially flat they were up 2% while loss cost trends were up 5% and in workers' comp, which includes both primary comp and risk management pricing was up two 3% again.
The loss cost trend of five and a half.
Internationally, we continue to achieve improved rate to exposure across our commercial portfolio and our international retail business pricing was up about nine 5%.
Rates varied by class and by region as well as country within region.
And loss costs are trending six two.
Turning to our consumer businesses and our North America High net worth personal lines business again, net written premiums were up about 6%.
Our true night high net worth client segment, However grew 12 and a half.
There is a flight to quality and capacity in our homeowners business we.
We achieved pricing of about 12, 5%, while the homeowners loss cost trend is running about 10 and a half.
International consumer lines premiums grew over 10% in the quarter again in constant dollar.
Our international A&H Division had another strong quarter with premiums up about 21%.
Asia Pac was up nearly 40% with half of the growth coming from the Cigna acquisition.
Latin America, and the U K each were up about 13, 5%.
Premiums in our international personal lines business were up less than 1% in constant dollar.
In our international life insurance business premiums doubled in constant dollar while life income overall was also up over 100%.
Both positively impacted by the addition of the Sigma Asia business, which is on track.
As we enter 23, while early days growth in our Asia consumer business, including non life life, and a and H is widespread and strong.
A combination of a strong external environment and our capabilities and presence.
<unk> lending increasing foot traffic across retail and banking operations and the resurgence of leisure and business travel are all contributing to strong growth leisure travel alone was up nearly 400% over prior year.
And as China reopens from its strict pandemic controls it will further stimulate growth in the region, I think trade, which benefits commercial lines in business travel and tourist travel as the Chinese begin to travel again on holiday.
As regards China as you know last quarter, we received regulatory approval to increase our ownership in <unk> insurance group to 83, 2%.
Since then the transfer of shares from a number of separate shareholders has taken place and we've increased our ownership to 64%. The remaining 19% is expected to close in the next weeks or months in summary, we.
We had an outstanding year and looking ahead, we are starting off on a strong foot in the first quarter overall.
<unk> remained favorable.
In terms of continued growth for our businesses globally, and then add the strong trajectory of growth from investment income.
Despite the challenging macro environment I am quite optimistic about our future and confident in our ability to outperform I will now turn the call over to Peter and then we're going to come back and we're going to take your questions.
Thank you Kevin and good morning.
As you've just heard we continued to deliver strong underlying business in investment performance in the fourth quarter, leading to another year of record results.
Book value and tangible book value per share increased six 2% and nine 5% respectively. Since September .
The increase reflects strong operating results $544 million in dividends and share repurchases as well as net realized and unrealized gains of $1 6 billion after tax including $1 3 billion in the fixed income portfolio from declining interest rates and foreign currency translation gains of 500.
$94 million.
This quarter's mark to market investment gains, while the prior quarter's losses from a rising rate environment.
Reinforcing our view that these fluctuations in valuation, particularly on our high quality fixed income portfolio are largely transient and don't represent real economics for a buy and hold insurance company like Chuck.
For the full year book and tangible book value per share decreased 12, 9% and 23, 5%, whereas excluding OCI, they increased five 3% and 3% respectively, including the dilutive impact on tangible equity of the Cigna acquisition.
Our core operating return on tangible equity for the quarter and year was 18, 6% and 17, 2%, respectively, while our core operating ROE for the quarter and year was 11, nine and 11, 2%.
Turning to investments adjusted net investment income for the quarter of over $1 1 billion topped last quarter's record by more than 6% and was 24% higher than the prior year quarter.
We anticipate this to continue to increase in 2023 through portfolio growth and a continuing attractive rate environment and as such we expect our quarterly adjusted net investment income to now be in the range of 113 5 billion to $1 55 billion.
The quarter included pre tax catastrophe losses of $400 million principally from winter Storm Elliot.
Were other weather related events in the quarter offset by changes from prior quarters cats.
However, there was no change in our aggregate Hurricane Hurricane Ian estimate.
Catastrophe and crop insurance underwriting losses, together added six six percentage points to our P&C combined ratio.
We had favorable prior period development and our active companies in the quarter of $254 million, mainly in a short tailed lines, primarily from commercial P&C lines of property Marine and agriculture from 2020 in 2021 accident years.
In addition, there was adverse development of $87 million in our legacy runoff exposures, including $62 million related to asbestos, which was recognized as part of our annual Reserve review.
Our paid to incurred ratio for the quarter was 102% of which about eight percentage points related specifically to payments in our crop insurance program, which are typically higher in the fourth quarter each year.
Paid incurred paid to incurred ratio was 85% excluding crops cats in PPD.
International Life Insurance segment income post the Cigna acquisition is as expected.
Set for adverse nonrecurring $52 million adjustment in the quarter related to watch high the company's partially owned insurance entity.
This adjustment adjustment was to better align our accounting policies and procedures.
In addition, the life insurance segment and total benefited from a reserve release of $60 million in the quarter related to our combined North America business.
Our core operating effective tax rate was 17, 5% for the quarter and 17, 8% for the year in line with previously guided range.
Our expected annual core operating effective tax rate for 2023, we expect to be in the range of 18% to 19%.
On a final note Chubb is adopting long duration targeted improvement accounting guidance or LD Ti as of January one 2023.
This changes the accounting for long duration contracts, which relates to our life insurance businesses.
And this is an accounting change only having no impact on the underlying economics in the 10-K, we will disclose the historical book value impact as of one and two years ago, but as of year end 'twenty. Two we expect a net favorable but immaterial impact to book value.
I'll now turn the call back over to Karen.
Thank you and at this point, we're happy to take your questions.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
And your first question comes from the line of David <unk> from Evercore ISI. Your line is open.
Hi, good morning.
Thanks for the detail on the rate by line of business and loss trend by line I thought that was helpful. I am interested in the casualty market, where it sounds like price is still above loss trend.
Hearing again, the need for additional rate here Im wondering if youre seeing.
What what the market's disappoint is in terms of getting that additional rate or if competition is picking up here at all.
Interest rates are higher were obviously seeing some competition picking up in professional liability. So just wondering what youre seeing in North America casualty.
Yes.
Look I don't think there is.
An increase in competition.
Related to interest rates.
Okay.
And remember look at the looking at the yield curve.
Looking at the market expect where expect rates to be going out a couple of years no one misses that and rates are not at such a level.
That it would have a material impact if you were thinking about cash flow underwriting the business and you have liability durations in your in your question there.
Run somewhere between seven years 25 years, depending on the line of business. So I would.
I don't think Thats.
Taking time to talk about that because I listen to those that kind of thinking and you're a smart guy.
Others are I think you guys should think that through a little more.
It's more to do with them and I don't see an increase in competition.
I see a pretty steady market.
What I do note in certain lines of business is either.
A lack of recognition of the loss cost environment.
Naive tie.
All around loss cost environment.
Or just a failure of management to be in touch and drill in and.
And show leadership take action and I, just I'm concerned about that in certain lines.
Sure.
When you think about it on a risk adjusted adequate return basis, and Thats why I spiked out two lines in particular I don't think there is a.
A recognition among most that to maintain disciplined you better keep pace with loss cost because there is no room.
And in some cases overshooting the mark.
And.
This can get this can get away from you pretty quickly.
We're not in a benign inflation environment and casualty and that has nothing to do with general inflation.
Has to do more with everything around so called social inflation.
And you can see it.
<unk> that has footprints that go back a number of years.
And it's very very clear.
Then you have a couple of other lines, which I spike out separately from casualty.
Market conditions, where pricing has been very good.
And.
And loss cost has been has been reasonable.
So you can understand rate adjustment give back but be careful it's not endless.
Right. Okay. That's that's helpful.
I appreciate that answer and then just.
Just following up maybe a question for Peter.
Could you talk about the drivers of prior period development in North America commercial between short tail and long tail lines.
No I think all I'd say is if you looked at the prior year quarter. There was a significant COVID-19 related release. So if you are comparing I think you just need to adjust for that.
Great. Thank you here last year last year quarter had a large COVID-19 adjustment.
So thats why its hard to compare you can't you can't.
Compare quarter on quarter that way here from year to year within north yes.
Within North America commercial.
Okay, great. Thank you.
And your next question comes from the line of Elyse Greenspan from Wells Fargo. Your line is open.
<unk>.
Hi, good morning, Evan.
First question.
It relates to your own reinsurance book.
We've heard about some pretty strong rate increases in January one.
Q2.
To write more property cat reinsurance yourself.
Yeah, Elyse, just see you know youre breaking up a little bit I think I got you, but your.
Just be aware that it's hard if you're not coming through really clearly.
I think you were talking about property cat and whether we see it as an opportunity.
Look.
We have a very clear mind.
Our standards risk adjusted.
Returns, we would expect to see.
In property cat to increase our exposure.
And and you know.
We're in the middle of the market and so I am not going to comment any further than that except that if the conditions are right.
From both in both terms and in pricing.
Then chubb is a risk taker.
In property Cat, we will increase.
However, it is not a business we need to chase.
By any means and so we will only deploy additional capital to.
To take more exposure, if we like the trade.
Beyond that.
I know you want to know specifics and I'm hardly going to look forward and.
And talk about the.
Talk about a while we're on the field of play.
Youll see the footprint after the fact.
Okay. Thank you and then my second question, Evan you mentioned commercial property.
Picking up following hurricane and I would think.
As we insurance rates move there it'd be a trickle down impact and perhaps rates get better there as we move through 'twenty three.
Would you agree with that statement.
Our lease.
I think if you listened to my commentary.
I just said that.
Yeah.
Okay, and I talked about.
I talked about the 14, 8% I believe it was increase in pricing.
I mentioned.
The cat environment.
I mentioned availability, I mentioned reinsurance availability and reinsurance pricing.
Okay.
As you think out do you think property is probably one of the stronger growth opportunities within your commercial bucket in 'twenty three.
I think I already made my comment about that property is an opportunity for Chubb is what I said.
Only 10 minutes ago.
Okay and on it any further than that.
Okay. Thanks, Kevin guidance.
Thanks.
Your next question comes from the line of Paul Newsome from Piper Sandler Your line is open.
Good morning, Thanks for the call congrats on the year.
I was hoping you could give us a little bit of additional color on.
What we've seen at Chubb from exposure changes over the last couple of quarters.
We move into 2023.
There are some folks, including our strategies thinks we're going to be in a recession.
Time, this year and just wondering if.
Yes.
The sensitivities among your books, what parts of your business would you see it.
In the future and what parts would be less sensitive to the assumptions and exposure changes.
Yes.
You know I'm not going to go deep into that but.
Hugh I will relate you back in my commentary.
Sure.
I said that the industry in casualty.
Needs to get more rate.
To keep pace with loss cost.
And one of the things.
That is in my on my mind in that regard.
You can't rely on price.
As much going forward in casualty.
<unk> is about.
Sale, you're right off of sale or Youre right off of payroll.
You read off of.
Human.
Or business related exposures and could be square footage and to measure traffic of consumers coming through these are all.
Economically.
<unk>.
Suppose your movements.
That will whether we have recession or we don't have recession.
I don't think that's the point the point really is as economic activity relative to 'twenty two.
In 'twenty, one certainly is going to be slower.
And so you need rate.
Pure rate.
And can rely less on the year.
Exposure.
Percentage of exposure.
Help.
The performance when you think about rate to exposure.
Inflation in loss cost.
That.
Is more of what's on my mind, when I think about exposure I don't think about it as much in terms of growth.
Overall in the support of our growth rate.
Think our growth rate.
We'll be just fine.
Okay.
Then maybe as well could you talk a little bit about.
The ability and bulk chubb and the industry to pass on higher reinsurance costs to sort of primary commercial lines.
Thank you just changed a little bit I think structurally over the years and.
I'm not sure what the sensitivity is today in terms of how quickly the primaries lines will respond to higher reinsurance costs.
Today's environment.
Any thoughts there would be great I think just helps out.
Well.
You know I can't speak to everybody else and so youll just have to stay tuned and figure that out Paul.
But beyond that I know.
When I think about short tail lines, where youre seeing reinsurance price increases I'm not worried from a chubb point of view.
<unk>.
<unk>.
Achieving.
Right.
On price.
To both keep pace.
Or exceed loss cost.
What we expect for cat.
And to manage reinsurer increased reinsurance costs.
Hi.
I think that and that's why I gave you the fourth quarter pricing.
So I think that speaks for itself that way.
Thanks, a lot appreciate that will help as always you're welcome.
Your next question comes from the line of Greg Peters from Raymond James Your line is open.
Good morning, Greg.
Good morning, good morning, everyone.
So.
Obviously you commented this open your comments so just.
Just letting you know I heard your comments, but im looking for further clarification.
Yeah.
Just to repeat myself.
Well you didn't say much about this so hopefully I can get a little more out of you but.
I was I was intrigued by your comment about the retention in commercial at 96%.
<unk> and <unk>.
Maybe you could give us some historical context, and then more importantly.
You talk about the moving pieces of the market financial lines Workers' comp do you have a different view of how that might trend over the near term.
We're willing to share with us it should add.
Yeah.
Okay.
Okay.
On your first question.
It's on a premium basis, the 96% so it's both policy count.
Customer retention in terms of unit count.
And at some point.
Andrew has the impact of of price of right in there in the 96 so.
On a policy count basis.
Customer retention basis, it is a a lower number but but but on historic terms basis, it's very high.
It's very stable our renewal book of business.
And and I think thats reasonably true for the industry, given where you are there was so much movement of customer during the hardest part of the cycle and Covid and all of that and as people pulled back capacity in so many <unk>.
It's hard to find a new home and.
And then you find that there is more stability in the.
In retention of customer both distribution doesn't want to move it the customer themselves don't want.
And so you have more of a stability that way so that's running at a high level.
I look forward on financial lines.
And comp.
Look I can only give you if I'm going to prognosticate to you I can only prognosticate, what I would think would be logical and markets are never logical.
There's all kinds of players I do see in financial lines more of the established players really know the business.
Our our our more stable and showing more stability and recognizing that okay. There has been where are we on a risk adjusted and at an expected loss cost basis, they have more insight into that.
Then done a lot of small wanted these are.
So it creates a little chaos in the market that way, but I see a little more stability that way right now.
Beginning to emerge.
Comp.
As you know.
I don't know what to tell you.
The market has to draw a line.
And I think that moment of truth is coming.
Yes that makes sense.
Another area that you've that Peter commented on it seems kind of important.
I'm going to have to review the comments in the transcript, but Peter maybe you can go back.
The give and takes out of the life insurance.
You talked about assimilating the accounting.
And then you talked about some other.
Headwinds that happened in the fourth quarter can you can you go through that and maybe give us a little additional color on that.
So the the onetime charge I mentioned and it's a nonrecurring charge.
Is it related to what Ty as it relates to aligning our accounting policies as our ownership levels increased.
And that was $52 million.
There wasn't additional which I didn't say about $8 million of FX impact.
And so that's how I'd think about if you are looking at the international life insurance business the reported income.
And adjusting for those two things.
That would give you more of a sense of how we view ongoing income coming out of that business, which is why we spiked out the largest of the two and I'll just highlight the one other one.
So in our mind. So that's like that brings you to about $175 million, it's about $60 million, putting the two together.
Okay got it X will be what it'll be but to be very clear. The 52. We view very much is one time to align policies as we've gotten closer to and more insight.
Got it thanks for the answers.
Your next question comes from the line of Tracy Bengie from Barclays. Your line is open.
Good morning.
Good morning, I would like to go back to the discussion on casualty I fully understand that rate to increase.
To keep up with loss cost trend, but there are things you can do on the structural side are you, making any meaningful changes in attachment points are deductible.
One of your competitors mentioned that inflation is causing more losses.
The access layer.
Yes of course.
That's all that listen we can track.
<unk> point changes.
And all of that in.
Ventilating of layers and all that good stuff so.
Yes.
And that's that.
That's all baked into our thinking.
Of course.
Okay got it.
We actually got more color from you on loss cost trend by business line. This quarter and you mentioned just sticking with North American casualties that log costs were $6, 9% can you give context, how that trended versus prior quarter.
And if you could also maybe Bob.
And if you could tease out if this is the level you are absorbing right now are using a higher projected loss trend when you think about risk adjusted return.
I'm really not going to overly dwell on this subject now.
So I'm going to move along but what the only other piece of information I'll give you is that the loss cost trends we have.
I gave you an overall and that means as a mix of primary and excess and all of that baked into it.
It is stable our view is stable.
At this time and we constantly look at it and I gave you a lot of information in the second and third quarter around inflation and how we adjusted for our views and forward views on inflation both in pricing.
And in our actual reserving.
So.
I'm going to stop right there.
Got it thank you.
Youre welcome.
Your next question comes from the line of Brian Meredith from UBS. Your line is open.
Hey, Thanks, Kevin just curious given where rate is in and loss trend is there more room here as we look into 2023 four underlying margin improvement of business or are we getting close to kind of good solid acceptable return on the business.
Thank you Ivy.
Combined ratios Brian .
I think they are they.
They are just stellar.
They are world class returns.
And.
And I'm very happy with the returns in our portfolio.
And as far as whether they would get any better well stay tuned.
Okay. Thanks.
And then the second question no I don't give forward guidance.
I was hoping.
<unk>.
I Love you dearly as a good driver.
Okay.
The second one I'm just curious.
For the comments on capital management, you guys have done a ton this year and it's great, but it did slow in the fourth quarter was there anything going on anything with respect to thoughts as why you slowed the share buyback in the fourth quarter relative to third quarter.
No.
That's why I really did want to take time.
And stepped back in.
We all look at perspective together.
All of our capital management policy and how it translated to numbers.
And.
I mean, it's a stunning amount of capital.
We have used.
It speaks to our stewardship of capital and our earning power.
Over the couple of years and I wanted to create dot context and perspective nothing has changed.
At all in how we manage.
Think about managing capital.
And buybacks is just one.
Dimension of that.
As you know and we have a buyback authorization.
And we have a bunch remaining within that and we say that as we do when you read it that we will repurchase up to.
Dod amount.
We're just steady as she goes nothing has changed about how we view it.
Brian maybe I appreciate the context, just to what <unk> said, so we have about $1 6 billion left so up to $1 6 billion through the first half of this year.
One more point of context, as we looked at it and this is not the framework. We use this has come up on a prior call, but buybacks and dividends of $4 4 billion aggregate to about 75% of our income for the year, which we think is a reasonable way to compare to others, but it's not actually how we manage it.
Got you. Thank you.
Your next question comes from the line of Alex Scott from Goldman Sachs. Your line is open.
Hey, good morning.
First one I had is actually a follow up on the last question.
On the capital front, when you think through how strong the margins are as <unk> as you pointed out.
And price adequacy across a lot of your business.
And a pretty strong place.
Balanced with some of the comments, you're making about the forward looking casualty markets and so forth.
How does that make you feel about.
Your capital and your willingness to deploy into organic business at the moment.
When we think about.
Starting point.
Yes.
And the comments you've made about the next year and casualty potentially.
Look we have.
Plenty of capital and firepower.
To support organic growth.
And our appetite.
I already said it.
Around property and it extends to any line of business.
If we like the terms and the pricing.
On a risk adjusted basis.
We will grow our exposure period.
Got it let's say.
Okay.
Second question.
Volatility of unpaid to take it.
Understood.
The second question is also a growth question, but on the on the life insurance business. Just wanted to see if you could help us think through now that you've completed the Sigma acquisition, you're getting through some of the integration and so forth what does that look like in <unk>.
Thinking out over the next year or two in terms of being a growth engine for the company.
Yes, I think it's.
I think it is both in earnings.
And.
It is both a source of earnings growth.
And it is a source of revenue growth.
Particularly in Asia.
And it is in.
Both.
<unk>.
The risk.
End of.
Life insurance, which think about more accident and health oriented.
Which I've gone into detail about that.
As well as protection more traditional protection and savings business.
Think about it.
True.
Variety of distribution channels.
Agency.
Direct marketing telephone based.
The fast emergence of digital channels.
Think about it in partnership with our non life business.
Very active that way and Thats a competitive advantage for Chubb.
And life in Asia, as our integrated capability and distribution in product demand.
Life and non life together.
To the same customers.
I think about the growing consumer.
Base Middle income in particular.
And then high net worth.
Particularly in certain territories.
China and Hong Kong based in.
In the Middle income from Korea, Thailand, Vietnam, Indonesia and.
Think about.
The.
This is the most dynamic.
Region in the World when you think about long term wealth creation.
And I think the next one or two years sure look good but that's not what's on my mind.
Next five to 10 years.
And how it's now 20% to bar business Asia.
And the majority of it is consumer.
Not commercial.
When I think across all lines, including real life.
That business to me will represent a growing a greater percentage of Chubb.
And over time more you can't measure it just quarter to quarter, but over a period of time.
When you look at it out its growth trajectory will outpace the rest of the company.
Kevin It very helpful. Thank you.
Welcome.
Your next question comes from the line of Mike Zaremski from BMO. Your line is open.
Hey, good morning.
First question.
Is on the helpful Pedro incurred.
Ratio comments, you provide us on the call and obviously, we get them from the accusing case too but.
I was looking back.
I can see that the underlying Pedro <unk> X the items you called out.
<unk> increased to 85 up year over year from 81, but if I look kind of back at pre Covid years.
Pre I guess substantial rate increases in terms of conditions changes to obviously it was running in the low 90. So just curious at a high level. If you feel this ratio is kind of running kind of a little better than you expected and maybe that's for for good reason given the.
Essential changes in the marketplace over the last few years.
Well I think it.
Tells you a few things.
We've grown our exposure.
A lot.
And your first incurred losses.
And we're in a fast we've been in a faster growth trajectory. So when you when you conceptualize.
We have grown more quickly exposure.
Incurred losses come.
And grow at a certain pace before the page come through.
So on one hand, you have that.
And then on the other hand, you have the strength.
And maybe it speaks ultimately to the strength of our reserves.
And.
Let's just wait and see over time.
It's nothing but good news.
Okay. That's helpful.
Follow up is just curious if you could.
<unk> within kind of update on strategic priorities as regards to you.
North America commercial kind of moving down market.
Small and small kind of medium size employer.
Competitive sandbox is that still.
<unk> strategic priority and it is M&A also on the table there. Thanks.
Okay.
Yes.
That's right.
You know Amit M&A off the table, though there is no M&A.
I am looking at a table that is empty at the moment.
It's organic it's organic growth and we are doubling the long end it is very.
Digital and modern centric.
And in.
In concert with our.
Our middle market and lower middle market business.
And the two of those wells.
The small commercial itself gets modernized into a digital enterprise.
It is a consistent.
And very intense.
The strategy in terms of management focus resources and attention I'm looking at John Lupica, I'm looking at John Keogh.
We have the most senior executives with their eyes, and Julie Dillman, who.
Who runs all of our it and.
Ops and drives our transformation.
From that and we've got so much executive talent judge.
<unk> focused.
And committed debt.
This is a this is an important future business to Joe.
And.
It is just it's consistent.
It's you grind it out yard by yard.
Thank you.
And there are no further questions at this time, Ms. Karen buyer I turn the call back over to you for some closing remarks.
Thank you everyone for joining us today, and if you have any questions follow up questions, we'll be around to take your call.
Joined today thanks.
And this concludes today's conference call. Thank you for your participation you may now disconnect.
Please wait the conference will begin shortly.
Yes.
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Yes.
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