Q1 2023 Chubb Limited Earnings Call
Ladies and gentlemen, thank you for standing by my name is Brent and I will be your conference operator today.
This time I would like to welcome everyone to the Chubb Limited first quarter 2023 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 at that time simply press star followed by the number one on your telephone keypad. If he would like to withdraw your question again press Star one. Thank you. It is now my pleasure to turn today's call over to MS. Karen buyer director of Investor Relations. Please go ahead.
Thank you and welcome everyone to our March 31, 2023 first quarter earnings Conference call. Our report today will contain forward looking statements, including statements relating to company performance pricing and business mix growth opportunities and economic and market conditions, which are subject to risks and.
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 Dot <unk> dot com for more information 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.
Details are provided in our earnings press release and financial supplement.
Now I would like to introduce our speakers first we have Evan Greenberg, Chairman and Chief Executive Officer, followed by Peter <unk>, Our Chief Financial Officer, and then we'll take your questions.
So with us to assist with your questions today are several members of our management team.
And now it's my pleasure to turn the call over to Evan.
Good morning.
We had an excellent start to the year highlighted by double digit operating earnings growth.
Led to record results.
Had double digit premium revenue growth that was global broad based and driven by strong results in our commercial and consumer P&C businesses and our international life business.
World Class underwriting results within 86, three combined ratio.
<unk> net investment income and life income that more than doubled.
North America, P&C rate and price increases reaccelerate it in the quarter. It was in word standout performance that I expect will continue.
We grew operating income almost 12% to $1 $8 billion and that drove a 15% increase to $4 41 per share both records in context of what it was an active cat quarter are published <unk> combined ratio reflects.
Simply outstanding underwriting performance from our P&C businesses. The 83.4 ex cat current accident year combined ratio was a record.
On the investment income side record adjusted net investment income of $1 2 billion was up over 30%.
Our portfolio yield is now 3.8 versus 3% a year ago with our reinvestment rate, averaging five 5% our investment income run rate will continue to grow as we reinvest cash flow at higher rates.
Life insurance premium revenue more than doubled while life earnings doubled to $244 million driven by our business in Asia and predominantly. The addition of the Sigma operations, which are mostly anh and product makeup.
In this time of economic and financial market volatility and uncertainty Chubb is a safe Haven are.
Our business model and the fundamentals of our business are very strong and broad based our earnings and revenue. We're growing we have an exceptionally strong capital position and a conservative level of leverage at our operating cash flow of $11 billion in 'twenty, two and over 200.
Order 1 billion this quarter speaks to our strong liquidity.
Our unrealized loss as a percentage of tangible equity is 17% and will amortize back to par over a short period rising interest rates or our friend and most important as you know you can have a run on the bank and our business. So again this.
<unk> to an attractive profile that distinguishes chubb.
Peter is going to have more to say about financial items, including cats and prior period development investment income book value and a rising our Roe.
Now turning to growth and the pricing and rate environment.
Consolidated net written premiums for the company increased over 16, 5% in the quarter on a published basis or over 18% in constant dollars comprised of 11% growth in our P&C business globally, and 129% growth in life premiums.
P&C premium growth in the quarter was balanced and broad base, North America, Europe , and Asia, all produced double digit growth.
Beginning with North America commercial premiums.
We're up almost 12% or $6 two excluding agriculture.
Adjusted for the impact of one off loss portfolio transfers and our major accounts division year over year North America regular commercial flow grew seven 6%, which is representative of the minimum rate.
Growth, we expect for the balance of the year.
And by the way the seven six is broken down as 10% growth in P&C and minus 2% growth in financial lines.
Our major accounts and specialty division grew six 3% or eight sub at adjusted for the LPT.
And that was 11 11, 4% P&C and minus 7% financial lines.
Our middle market and small commercial business premiums were up six 5% or 7% in P&C.
And up 2% and financial lines.
Renewal retention for our retail commercial businesses with 97%.
On the consumer side in North America, our high net worth personal lines business was up almost 10%.
And exceptionally strong results and in fact, the strongest organic growth in over 15 years.
Turning to our international General insurance operations net premiums were up 10% in constant dollars or 6% after FX impact with commercial up 10, eight and consumer up over eight and a half.
Growth was led by our Asia Pacific region with premiums up over 18, 5% with commercial lines up about 15 and consumer lines up over 22%.
And Europe produced overall growth of over 10%.
In terms of the commercial P&C rate environment.
8% price increases reaccelerate it <unk>.
Pricing for total North America commercial P&C, which includes rate of six four and exposure change of four and a half increased 11, 2% against a loss cost trend of six seven.
Pricing for commercial property and casualty, excluding financial lines and Workers' comp was up 16, 9%.
Property pricing was up 27% with rates up 16, four and exposure change of nine one.
Casualty pricing was up nine 9%, which includes $7 four of rate and two three of exposure.
As I said last quarter for professional lines and workers' comp, which includes risk management. The competitive environment is aggressive and rates have continued to decline and recognition of favorable experience in.
In the quarter rates and pricing for North America financial lines in aggregate were down about 2% and in workers comp, which includes both primary comp and risk management pricing was up six four with.
With rates down a half a percent and exposure up about six eight.
Internationally, we continued to achieve improved rate to exposure across our commercial portfolio.
In our international retail business pricing was up about 8%.
With rates up four eight and exposure change of about two nine.
While loss costs across our international commercial portfolio are trending a six 5%.
Turning to our consumer businesses and <unk>.
North America high net worth personal lines business again, net written premiums were up almost 10% with our true high net worth client segment up over 15%.
Retentions were 104% on a premium basis and about 91 or on an account basis.
We continued to benefit from a flight to quality and capacity.
And our homeowners business, we achieved pricing of about 13%, while the homeowners loss cost trend is running about 10 and a half.
International consumer lines premiums again grew over eight 5% in the quarter in constant dollars.
Our international A&H Division had another strong quarter with premiums up about 20%.
Asia Pacific was up 34, and a half while the UK was up over 12%.
Premiums in our international personal lines business were down a point and a half and it was impacted by our business in Europe .
In our international life insurance business again premiums and income overall more than doubled our business in Korea and the majority of Asia is off to a good start to the year I was just in Korea, two weeks ago, our leadership franchise.
The strategy the execution and the growth overall in really good shape and this is a very large business for job and.
In summary, we had an excellent quarter and have had a strong start to the year with a lot of momentum heading into the second quarter. Looking forward. We are confident in our ability to continue growing revenue and operating earnings which in turn drive EPS through the three engines of P&C on.
Your writing income investment income life income.
Did that our business model financial strength stability and liquidity and I believe you oven Chubb, both the reassurance of safety and the attractive prospects of a long term growth company I will turn the call over to Peter and then we're going to come back and take your questions.
Thank you Ellen and good morning.
Before we begin I want to note that previously reported numbers in the financial supplement we just filed were adjusted to reflect the impact from the adoption of <unk> accounting, which primarily relates to our life insurance business.
The cumulative impact of <unk> on our book value and overall results as immaterial.
Please refer to page 31 of the financial supplement for detailed information.
Turning to our first quarter results as you've just heard we're starting out the year and exceptionally strong financial position.
Our P&C division's expanding life business and strong investment performance produced operating cash flow of $2 3 billion.
We grew our assets to over 200 billion and this includes invested assets of about 116 billion that continued to benefit from the current rate environment and generated our fourth consecutive quarter of record net investment income.
I would note S&P and Fitch, both reaffirmed our double a ratings and stable outlook, reflecting our strong financial position.
Relative to capital related actions in the quarter, we returned $772 million to shareholders, including $428 million in share repurchases at an average price of $212 81 per share and $344 million in dividends.
Book value and tangible book value per share increased 5% and eight 7% respectively from last quarter.
The increase reflects our record core operating income and net realized and unrealized gains of $1 7 billion in the investment portfolio, partially offset by the capital returned to shareholders I already mentioned.
Our core operating ROE for the quarter was 12, 6% and our core operating return on tangible equity was 19, 4%.
A year ago, even stated our target for 2023 core operating ROE, excluding excess capital or on a deployed capital basis to be 13% and core operating return on tangible equity to be 20%.
In this first quarter of 2023, we estimate these deployed capital ROE results to be in the range of 13, 5% to 14% and 23% to 23, 5% respectively.
Adjusted net investment income for the quarter was $1 2 billion and top last year's record quarter last last quarter's record by over 7%, reflecting higher reinvestment rates that impact recurring income as well as certain items totaling approximately $35 million, including higher than expected private equity distributions that <unk>.
From quarter to quarter.
We now expect our adjusted net investment income on a recurring basis to rise from this quarter's $1 165 to one two to one to two next quarter.
And we expect it to continue to rise from there for the remainder of the year given our positive cash flows portfolio turnover and the current reinvestment rate environment.
Let me make a few more comments on investments given recent economic and market events we.
We continue to maintain our consistent conservative approach to our investment process and our portfolio remains high quality with an average rate a ratings.
Our overall exposure to banks is 8% of invested assets with two thirds of that invest two thirds of that in <unk>.
We have no exposure to Silicon Valley signature our first Republic banks, we have no exposure to credit Suisse contingent capital Securities and do not invest in tier one bank Cocos as an investment policy.
Our exposure to regional banks is less than 1% of our portfolio and is in high quality names.
Our total direct exposure to commercial real estate is 4% of invested assets and 87% of that total is in investment grade securities with an average rating of double a.
This portfolio is skewed to multifamily and industrial sectors with under 20% related to the commercial office segment.
High yield credit is currently 14% of our portfolio and is targeted to the upper tier of the high yield market rated double BB with a current average rating of B plus broadly diversified with over 900 issuers and mandated to outperform in down markets.
Back to our underwriting business the quarter included pre tax catastrophe losses of $458 million split, 76% in the U S and 20% 24% internationally.
In the U S loss activity consisted of winter related storms and other severe weather events internationally results were primarily impacted by storms in New Zealand and Australia.
Prior period development in the quarter was a favorable $196 million included in that total is adverse development of $6 million related to the 2022 accident year cat losses comprised of 119 million adverse development from winter Storm Elliot.
And $113 million favorable from Hurricane Ian.
Excluding cat related development, we had favorable development of $202 million across all lines commercial and consumer with $228 million favorable related to short tail lines and adverse development of $26 million in long tail lines 10 million of which was from corporate runoff lines.
Our paid to incurred ratio for the quarter was 92% or 82% after adjusting for cash prior period development and a large payment related to the boy Scouts of America settlement.
Our core operating effective tax rate was 18, 1% for the quarter at the low end of our expected annual range I would highlight the first quarter. It often has a lower tax rate than the full year and we continue to expect our annual core operating effective tax rate for this year to be in the range of 18% to 19%.
Lastly, relative to <unk>, we closed on some of our outstanding shares during the quarter, which brought our ownership interest to 64%.
We continue to apply equity accounting for the first quarter and we will consolidate <unk> once we go over two thirds ownership.
Which we think will likely occur in the second quarter, when we anticipate exceeding 80%.
I'll now turn the call back over to Karen.
Thank you 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 followed by the number one on your telephone keypad.
Your first question comes from the line of David Madden with Evercore ISI. Your line is open.
Good morning, good morning.
Good morning, good morning, Evan.
So.
Really encouraging to see the Reacceleration in North America commercial pricing it sounds like most of that was rate versus exposure.
I guess I also heard that you said you expected seven 6%.
Sort of minimum growth in North American commercial throughout the course of the year. So I'm wondering if you could just unpack how you see that progressing between both.
Right on existing.
Policies as well as just growth in terms of adding new incremental units of exposure.
Yes no.
Yeah.
David.
As you know, we don't give forward guidance really.
I gave you.
Little slash.
But I'm not going to go further than that.
And it's pretty clear I expect the.
The trend you see.
And pricing.
And I expect the trend you see in sort of pattern in growth.
To continue.
<unk>.
And you got a sense of.
P&C lines growing and you got a sense of.
Professional financial lines and.
And beyond that it's not simply about North America.
And look at the company globally.
Frankly.
Look at the the.
The international P&C, and I expect that pattern to continue.
Consumer lines and I expect that pattern to continue.
Look at life, and I expect that pattern to continue the investment income and I expect that pattern to continue.
Okay.
Okay, Great I appreciate that and then as my follow up Evan in your letter you spoke about how chubb enhanced its ability to collect and assess loss cost data more quickly and accurately.
That helps you be more insightful and pricing and reserving.
I was wondering if you could just elaborate on.
<unk> enhanced visibility and if that played in <unk>.
You may have ticked up the loss trend a little bit in North America commercial.
Wondering what insight you gave you to do or this enhanced stability to view loss trend data how that played into potentially changing.
How youre viewing trend going forward.
Yes.
And I talked about this.
You are right in the letter.
And on previous calls.
And that is like so many.
Businesses.
If you take a bigger picture view of it.
Insurance.
And.
Hung other financial companies.
The nonfinancial, we're coming out of <unk> and have come out of a period of.
Very low inflation.
Zero cost of money fundamentally will hold overwhelmed.
By liquidity.
And.
In a low inflation environment.
You don't have to be <unk>.
Necessarily as insightful on loss cost.
Hi.
Any at a particular moment in time.
Lag.
Has less of an impact on you.
We have to watch it very carefully and we're always.
But the time element.
Date of when.
<unk> data when you get it.
<unk>.
You could be a little more relaxed.
Quarter rolled.
Two quarters old.
Less important.
In an inflationary environment.
Which we experienced.
And began while ago, that's a killer and for those of us who've experienced inflation at <unk>.
<unk> values can be in everything.
Inaccuracy.
And that's where we really.
Immediately when we saw it jumped on it.
And measured.
Time lagging in data.
Which.
You have to get to the source of input.
When youre looking at in <unk>.
Add inflation, whether it's on the physical side of one of repair is actually occurring to an automobile.
Home.
Yes, so on the.
The liability side very quickly.
And the development of that you have to be on top of the trend and you really have to unpack severity from frequency and then you had the impact of Covid.
On frequency.
No.
And then you add to that the tools we have available.
In terms of external data and the use of it.
And our ability to.
To manipulate and use data.
Internal and external more insightfully and more quickly.
You add the capabilities in analytics of this organization.
With claims and actuarial and underwriting together.
I think its a competitive weapon and advantage, particularly the speed at which we can react.
And I think any modern financial organization that distinguishes itself as part of the action.
Great. Thank you.
Youre welcome.
Your next question is from the line of Mike <unk> with BMO. Your line is open.
Hey, good morning first question.
On reinsurance costs any.
Now given.
The industry is experiencing higher reinsurance costs, but both on property and on the casualty side and maybe thats not the case for Chubb feel free to correct me.
As Chuck contemplate any changes in its strategy, maybe retentions or is it or is.
This.
It's still TBD.
As things progress.
No no no material change.
<unk>.
And.
We obviously arent going to.
As you can appreciate I am not going to.
Discuss our own reinsurance program sets.
For our own protections.
That's proprietary but our retentions have not.
Have not changed in any material way.
And.
And we've got a big balance sheet, we take a lot of risk net and.
We really don't buy reinsurance for earnings protection so much.
We buy it for more for.
<unk> balance sheet protection and depending on the line of business.
Volatility.
And that.
That's been a steady.
Sure.
Policy of ours, and we maintain it regardless of cycle.
Got it.
We can follow up on market conditions, and then you gave us a lot of good color.
The acceleration in pure rate.
It accelerated a lot more than I think there might have been.
Tad bit of loss cost pick up just on the North America commercial side, but maybe you can kind of lend some more color on.
Do you feel the market is being more rational.
In terms of kind of adjusting to the loss cost trends and.
And also higher reinsurance pricing and it sounded like you were optimistic that.
Thanks.
Yes.
Competitive conditions.
<unk> gotten a little bit better quarter over quarter.
Yes.
I think it's a little bit of a mixed bag.
Property certainly.
In short tail certainly responding.
I think in larger account business responding a little better.
Then.
In middle market.
The middle market has stability to it.
It's more in P&C lines.
I think that financial lines certain areas of financial lines.
And so in those areas.
I generally like the tone.
We're seeing excess casualty, particularly in larger account business respond.
Hi.
Im imagining.
In time middle market will need to and we will.
So great.
Great as is.
Our rates are increasing there.
When I look at professional lines.
Have to unpack it between financial lives between professional liability and there are all kinds of classes and D&O.
Both private and public D&O I think public D&O.
Market.
As.
There were a lot of players with no data.
No experience.
And.
They are receiving many of them capacity by those who don't seem to have their eye on the ball.
And there is an area, where I think the market is.
As overshooting the Mark.
And.
Of course, we will always trade.
Case.
Volume for.
And under the right underwriting.
And it's not an area that I think is devoid of risk.
Particularly as you look forward everything from.
Recession and volatility in financial markets.
Climate change.
Okay.
Claims of Greenwashing and all of that so it doesn't.
And that's just align on the margin so it's a mixed bag.
Comp is as overall experience is good exposure is growing.
On the other hand, so you got to be careful and exposure because pictures.
Rising.
That means indemnity severity.
Ryzen.
I've said it before.
Well the.
The market could shoot market, obviously, you're going to be a little cautious.
But overall in direction.
See the direction in P&C.
Lines.
And I think that direction is a tone that will continue.
And a pattern that I expect will continue.
Thank you.
Your next question is from the line of Euro and Ken <unk> with Jefferies. Your line is open.
Thank you good morning.
My first question.
I guess more specifically to North America commercial do you see the overall book.
Okay.
Do you see any but anyway go ahead.
Yes.
Well I could do that but I'm not sure we havent.
Yes.
With North America commercial do you see the book overall as rate adequate.
Yes.
Dale.
So with that in mind, I guess, why why would we not see more acceleration of premiums given that rates are adequate and picking up why wouldn't you lean into that a little more what's greater exposure.
Sure.
Well you said overall.
Right.
That's overall.
And then.
And so I'm happy to answer overall.
And by the way I said to you 10% growth in P&C lines.
<unk>.
And I said financial lines professional lines.
Financial lines.
In aggregate down.
So.
I think in areas, where we like.
Pricing.
Youre seeing the business grow.
And all.
And I'll leave it at that I'm not going to.
Go deeper than that I I think I gave.
I just gave what investors need to know.
Okay.
And then my other question was.
On the G&A expense side seems to be a modest pick up in North America, both personal and commercial are there any specific platform investments you can call out or is it just wage inflation hiring.
No the expense ratio.
You'll note.
<unk>.
Was up because pension expenses fundamentally is pension expenses.
With the rise in.
And interest rates.
Picked up and.
That's just.
That's something that you can't control really.
Is it just an it's an accounting adjustment.
For future pension costs on.
We have a defined benefit pension plan is closed for many years it was legacy.
Chubb.
And so that's the impact that's all.
Got it so is that a reasonable run rate to think of for the rest of the year.
Yeah reasonable.
So you'll note the pattern of expense ratio, it's usually a little higher this quarter than in.
In future quarters, so when I look at it.
Alright that pension will be consistent each quarter and then there is other stuff around that.
Copper this year. Thanks, so much.
You're welcome.
Yes.
Your next question is from the line of Greg Peters with Raymond James Your line is open.
Excellent good morning, everyone.
Evan in your prepared comments I think you mentioned a recent trip to Korea, you talked about the life results.
Maybe you can give us an update on the Sigma acquisition, how the integration is.
Proceeding and if theres any update on sort of ROE targets related to Cigna.
Now now that its in the Chubb family.
Yes.
Just take the last part first as you know the Argus scrambled now and so we don't really spike that part out but look on months.
I am energized by what I.
C N Asia.
And what we have Bubbling.
And by the way I'm going to do third quarter earnings from Asia, I'm going to do it from Singapore.
Because I'm going to.
I'm going to spend six or seven weeks out there.
Okay.
The integration.
Is going so well.
And we're so energized by what we see in the power of the organization with the two parts pulled together the integration has gone extremely well.
And of course, all the efficiencies that's the easy part.
That's all right on target, but it's the.
The growth in the.
The breadth of capability.
Our direct marketing business.
The largest direct marketers of insurance.
In Asia there is.
Nodded out to me.
Both through telemarketing through digital.
Life and non life.
The variety the breath of product there.
A number of partnerships that we have between the organizations and the compelling offering giving given the breadth of and the ability of our life and non life together do work together like one organization.
No, it's really how's that.
Customer database, we have between the companies that <unk>.
Number is in the millions.
Of customers to cross market and cross sell to that we're just actively doing through.
Telemarketing and digital.
The growth of our agency.
Organization.
Whether it's in Korea through.
Through.
Independent life agency distribution.
In places like Thailand, and Vietnam with tens of thousands of agents that are growing.
When I look across Korea, Thailand.
Indonesia, Taiwan.
Even Hong Kong that small.
But the combination of the two and growth is accelerating in these areas.
The number of partnerships that we have.
So when I add it all together.
You know I I feel really good about what we have is franchise and capability.
And the potential of it over time.
And by the way.
You know a lot of the same features IC in Latin America.
Much smaller region.
Just the geography of it.
The size of economies, but.
It's excellent and then.
The way I'm sure you noticed that in the quarter.
Europe grew 10%, that's 40% of their business renews in the year.
They do in the year and they grew at 10%. So it's really broad based.
And I like what I see.
Yes, the Europe , the Europe numbers youre kind of surprising.
Against the backdrop of the macro news we read about.
Here and there.
Hi.
You spent.
Sometime during the discussion talking about all the data resources the analytics you have.
One of the topics.
Become more popular.
And more recently is this chat chat GPT. So maybe you can segue and talk about how youre deploying.
Across your organization and the opportunity you have to drive further efficiencies as you utilize these types of tools.
Yeah.
I'll touch on it a little bit.
No.
Chat GBT is.
Generalized AI.
Which is text based.
Analytics.
Deep thinking.
We use other kinds of AI.
Okay.
Deep learning.
And.
Others beyond that or is that or.
Number spaced math based.
As well.
We have been.
Experimenting.
And the use of various forms of AI is.
Is the point.
Against different.
Areas of our business.
Depending on the kind of.
Opportunity your problem.
Or enhancement of power that we're.
We're trying to address from underwriting.
And insight and risk cohorts to claims.
Sure.
Cut to marketing and analytics for customer interface.
Sure.
Customer service or telemarketing.
And we've been doing this.
For the last five years.
We have a variety of use cases.
That have <unk>.
Proven themselves out.
And we continue to iterate with them.
We have a lot of data.
And we have an ability to enhance that data.
With external data.
It's not simply about AI tools.
It's about data and your ability with that.
So therefore, you'll keep pointless string in your day.
Data infrastructure becomes so important.
Data engineering becomes so important because it's a fuel that AI needs to feed on itself in all its varieties.
To become an insightful and powerful to you.
And.
In most cases, it's not going to replace.
Our highest skilled knowledge workers.
We won't do that.
Sure.
Quite a while.
But it certainly enhances the abilities on.
And the capability I'm not worried about my job.
It certainly enhances their capabilities.
And.
Now.
We're in the dawn of the period.
We use these tools at scale.
And the things that we have built and experimented with.
The momentum builds and they start rolling out at scale.
And that means in sight.
That means speed.
That means the accuracy.
That means cost.
That means momentum.
And think of that.
In terms of.
A number of years.
Months.
Great. Thank you for the answers locally.
Youre welcome.
Yes.
Your next question is from the line of Elyse Greenspan with Wells Fargo. Your line is open.
Hi, Thanks, Good morning, Evan My first question.
Is on <unk>.
Insurance market.
You guys saw some some growth and your reinsurance segment, but it sounds like from your commentary.
Seeing better opportunities it sounds like on the primary property side than perhaps.
More property reinsurance business, but I was hoping you could just expand on that comment and correct me if I'm wrong.
Yes, no you're <unk>.
You are correct.
We got a finite balance sheet, we can't take infinite amount of risk.
We like the risk reward.
Okay.
Total opportunity.
On the primary side.
Much more biased on the primary side.
Then we are on the cap rate side.
And so.
That is correct.
No.
Our cat re in.
And CAD.
Property excess.
Property quota share business.
So not just <unk>.
Straight cat re.
Those are areas, where we're taking more exposure but.
Youre right overwhelmingly when we look at the market and the risk reward.
We're more primary oriented.
Thanks, Tom and then my second question Peter I know you said that you guys will consolidate.
Why tie ownership.
When it goes above 80%.
Im not sure of Chubb does disclose like the earnings the earnings from White-eye, historically or can you just give us a sense of the expected contribution once.
That is consolidated or any help you can provide there.
Yes, we typically don't or we have not disclosed what ties earnings specifically, we will have more comments after it closes and we consolidate and what I've said historically is it won't have a material impact on a net basis to us.
In terms of earnings.
Okay.
Okay.
It will be.
Pretty neutral.
Initially.
Okay. Thank you.
Yeah.
Your next question is from the line of Tracy <unk> with Barclays. Your line is open.
Good morning.
Hey, Hi, a quick question do you manage your business more on net growth growth growth or is that vice versa. I'm, just thinking about capital consumption, if youre retaining more.
And how much do you want to grow gross premium.
No.
Frankly, we disclose our net to gross.
And.
Do you see that's pretty steady.
I'd.
We we manage.
Yes.
We measure both.
We use both gross and net.
For different reasons different purposes.
And I'm going to manage the balance sheet.
Net.
What I'm going to look at marketing.
Swinging a stick.
On our capacity et cetera, it's growth, it's a much more complicated answer.
Question, but it's.
When you get to operating.
But it's both.
Okay. Thanks.
Make sure that I understood prior comments correctly, so that 4% growth in gross premium written we saw in North America.
Our cell line, which was lower than we've seen in prior quarters that had to do more with business that has more volatility to it because of risk management business.
And.
And certain kinds of businesses that have a.
Gross.
Wine component to it but.
In that case.
Driven and ROI and all our discussion when we look at stick to the bonuses on the net basis.
Got it.
Just curious is talk net.
Gross but both are important to us as operators for different reasons.
Got it.
Just curious did you increase your loss takes from banking D&O claims activity. This quarter I noticed that your North America commercial lines underlying loss ratio improved.
Sequentially and year over year, so I'm wondering if that improvement.
Right.
Any raise in loss pick.
No.
Thank you.
Youre welcome.
Your next question is from the line of Alex Scott with Goldman Sachs. Your line is open.
Hi, Good morning, first one I had was just to see if you could give us some context for where CT reopening is that and just sort of the timing of how the backlog is progressing.
And maybe even how that's informing some of the analytics and things you're doing around loss costs.
Look frequency.
Of loss in casualty is.
Is just.
Has been on a March where it's rising and reverting to the mean of pre COVID-19.
It varies by line of business in some lines of business the frequency of losses still.
Hello.
Pre COVID-19.
In some others it has reverted.
So pre COVID-19 trend.
So it varies and.
But but overall frequency has been increasing and thats proxy.
And that's been going for a while so that's a little bit of yesterday's news.
The courts.
<unk> been reopened over a year or so.
There you go.
And the lawyers are are all active.
Got it.
And then maybe a little bit more of a housekeeping question for you, but on the life insurance segment, I mean should we think about L. DPI.
In the run rate up or down.
At the margin just a little difficult to tell from the outside because we only have a couple of quarters as cigna and so.
Not too long of a.
Track record to look at under the recast financials.
Alex the way I would think about it is and you pointed out between Cigna coming online purchase GAAP and LD Ti there's been movement in the numbers. The first quarter of this year things are settling and we think are representative of a run rate going forward.
Got it thank you.
Youre welcome.
Your next question is from the line of Brian Meredith with UBS. Your line is open.
Yeah. Thanks, Kevin can I, just quickly clarify something I get a bunch of questions on at seven 6% growth rate that you mentioned the premium growth for the remainder of your minimum premium growth you expect for the remainder of the year is that correct.
North American commercial.
Yes.
It's.
I gave you a feeling of a forward view.
Is that I would expect it to be no less than that.
And then I gave you a breakdown of the seven six that was 11 in P&C lines and was negative.
In financial lines.
Yes makes sense, so it's premium growth great.
Yes that was not reader trend or anything that was premium.
That's what I thought that's what I thought I just wanted to clarify sorry, it's getting a bunch of questions.
The second question I'm, just curious I'm trying to kind of do some mental math here on this and that can be dangerous but.
Looking at your 11 and change pricing in North America commercial versus the seven six premium growth.
Was there something going on with mix or something that would cause pricing to be greater than the premium growth. There is.
Always something going on with Max.
So is it a mix issue or something going on and remember I gave you.
I gave you.
<unk> growth versus <unk>.
Financial lines growth.
Hmm.
And.
I didn't give you any more on marketing to go deeper.
<unk>.
And then.
I gave you rate and trend.
Renewal retention rate I gave you that.
New business varied by area. So.
No.
Okay.
There anything more to it really not really.
Now in property and I should say this to you.
<unk> property, where you see the rate rate includes.
Because we can measure it so accurately.
Change in terms and conditions, so if deductible changes.
Fourth right.
And so you could exceed this exposure actually go down there.
If you are following me.
So that also when you want to roll around math in your brain that may help you a little bit.
That's really really helpful. And then can I just one follow up cyber market can you just tell us kind of whats. Your thoughts are there now in the cyber market is that attractive market at this point from a pricing and what's happened with term condition in the last couple of years.
Yes.
The terms and conditions as a lot of noise in particular, it's around.
Cat exposure in.
War and definitions of war or.
<unk> is a misnomer it's.
As hostile actions by nation States.
And.
That would be more of the term and condition.
<unk> of what's going on.
And beyond that.
The cyber loss environment has not been mined.
Ransomware frequency of loss.
And severity is.
Picking up.
<unk> temporarily down.
Ciber.
Pricing and underwriting has responded to the.
To the external environment, I think reasonably well.
And if it maintains discipline.
Then.
I'm not concerned.
But.
I would assume that all cyber underwriters see what we see in terms of the.
Loss environment, and you're going to be aware of it but other than that.
Some.
I think <unk>.
<unk> disciplined underwriting.
And pricing.
Perfect. Thank you Youre.
Youre welcome.
Okay.
Your next question is from the line of Ryan Tunis with Autonomous Research. Your line is open.
Hey, Thanks, good morning.
Yes, I mean, I guess, just taking a step back.
It's a life life related question.
Curious like over the past call. It five years or so if you could just kind of walk us through how your thought process as it has evolved to appreciate that business a little bit more I guess.
Coming from a place where the Sigma deal.
It felt like a nice little financial acquisition, but I didn't think it was going to put you in Singapore for seven weeks. So youre clearly more enthusiastic about this business. So yes.
How has your thinking evolved too.
So really think Thats a growth engine for Chubb.
Yes.
First I want to take a step back on that and say Asia is on my mind.
It's not simply the life business.
Half the business is P&C.
And that is robust Asia itself.
<unk> home is the number I have in my head, but it's roughly a $10 billion region for us.
The important it's massive region and scale, it's the greatest.
It has the greatest.
Growth.
Potential.
Economically.
I think of any region in the world.
Over the next.
Decade, two decades, so it has a volatility to it.
Naturally.
India, China Southeast Asia.
The.
Diana.
Ms <unk>.
Developed Asia.
Korea.
Japan, it's just.
It's massive.
Australia is part of Asia.
To us.
Back to the Australians.
And it's non life and life.
And I look at it as one.
Organization, it's Chuck.
The way they work together.
Awesome, we began our life business.
A decade.
Began at over a decade ago.
I mean heck I was pounding on the door of Vietnam to get one of the few life licenses they gave out.
In 2002, 2003, I was bang on that door.
Yes.
And we've been at it since growing organically.
Sure.
Through acquisition and the Cigna just <unk>.
Turbocharged it at the same time in our non life business.
We are growing from dust and A&H business that could have been incubated at a life company or a non life company.
Cigna is to a large degree.
A&H business.
Our life business.
Combination of agency distribution.
Direct marketing and the direct marketing this non life and life.
And the life products themselves are.
Are much more back to the future.
Because Asia is different.
Traditional life products.
Have much better Roe characteristics to them.
They have very low guarantees they are traditional savings they have a lot of risk.
Two of them.
Like A&H in particular.
Whether its dread disease or hospital cash.
Sure.
Very limited basic medical.
With the customer buys along with savings.
And.
Savings rates are high in Asia, you have a very young population.
The youngest in the world.
And a growing labor force and.
And it's combined with a very family oriented.
Culture.
<unk>.
And that drives long term savings and yelp low social safety nets.
And so.
Private insurance means more that all plays to life.
And to non life.
And frankly.
Operating my office from there.
And now I'm going to be out of both Hong Kong and Singapore is.
Sure.
Is simply there is such opportunity and I travel back and forth have for decades.
A few times a year, but this is just to be.
More insightful.
<unk>.
And deeper about it in terms of strategy as we go forward.
And my colleagues many of them we.
We will do the same.
Thank you.
Company.
Okay.
Just quickly I guess this is more nuanced might be for Peter but you.
You mentioned, some LPTA activity North America commercial just just curious if that had any impact on.
The loss ratio year over year.
Very it was minor in terms of.
It's impacted the loss ratio down expense ratio up.
What happens with it but very very minor.
You can measure it in a 10th of a percent.
Thank you because we did.
At this time I would like to turn the call back over to MS. Karen buyer.
Thank you everyone for joining us today, and if you have any follow up questions, we'll be around to take your calls Im joined today. Thanks.
Ladies and gentlemen, thank you for participating. This concludes today's conference call you may now disconnect.
Please wait the conference will begin shortly.
Yes.
Yes.
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No.
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