Q4 2023 Chubb Limited Earnings Call
Thank you for standing by my name is Eric and I will be a conference operator today.
Eric: At this time I would like to welcome everyone to the Chubb Limited fourth quarter 2023 earnings Conference call.
Eric: All lines have been placed on mute to prevent any background noise.
Eric: After the Speakers' remarks, there will be a question and answer session if.
Eric: If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
Eric: She would like to withdraw your question Press Star one again.
Speaker Change: Thank you.
Speaker Change: I would now like to turn the call over to Karen Beyer.
Senior Vice President Investor Relations. Please.
Karen L. Beyer: Please go ahead.
Karen L. Beyer: Thank you and welcome everyone to our December 31, 2023 fourth quarter and year end earnings Conference call.
Our report today will contain forward looking statements, including statements relating to capital performance pricing and business.
Karen L. Beyer: Growth opportunities and economic and market conditions, which are subject to risks and uncertainties and actual results may differ materially.
Karen L. Beyer: 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 on factors that could affect these matters.
Karen L. Beyer: 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.
Karen L. Beyer: 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 will take your questions.
Speaker Change: Also with us to assist with your questions are several members of our management team.
Evan G. Greenberg: Now, it's my pleasure to turn the call over to Evan.
Evan G. Greenberg: Good morning.
Evan G. Greenberg: Had an outstanding quarter and finish to the year.
Evan G. Greenberg: In fact, a record year.
Evan G. Greenberg: Our quarter's results included double digit premium growth record.
Evan G. Greenberg: P&C underwriting and investment income.
Evan G. Greenberg: Truong lifes operating income.
Evan G. Greenberg: All leading to exceptional operating earnings on both the per share and dollar basis, our results both earnings and book value related.
Evan G. Greenberg: Also positively impacted in a significant way by a one time deferred tax benefit related to Bermuda, its new income tax law.
Evan G. Greenberg: While the quarter's results are impressive and important the full year results that really matters most.
Evan G. Greenberg: Things being equal one quarter. Firstly tells the story are.
Our full year results were simply stunning.
Evan G. Greenberg: Core operating income dropped nine 3 billion up 45% or $8 2 billion, excluding the tax benefit.
Evan G. Greenberg: 28%.
Evan G. Greenberg: P&C underwriting income was a record $5 5 billion.
Evan G. Greenberg: With a combined ratio of 86, 5% and investment income was up 33% and.
Evan G. Greenberg: Top five 3 billion.
Evan G. Greenberg: As you can see the balance between underwriting income and investment income was about 50 50.
Evan G. Greenberg: Very healthy balance life income was over $1 billion, while consolidated premium revenue growth was 13, 5% for the year.
Evan G. Greenberg: For the year, our core operating ROE was 15, 4%.
Evan G. Greenberg: And our return on tangible was 24, 2%.
Evan G. Greenberg: Tax benefit contributed so excluding that our aro or core operating Roe.
Evan G. Greenberg: With 13 six.
Evan G. Greenberg: Tangible ROE was 21, 6% excellent numbers finally for the year per share book and tangible book value each grew by over 20%.
Speaker Change: All divisions of the company a major geographies contributed to these outstanding results last year and I want to congratulate and thank my colleagues around the globe.
Speaker Change: Our results speak to the global nature of this organization, which is one of the things that distinguishes Joe.
Speaker Change: Our fundamentals are very strong.
Quarter itself was simply a continuation of the year.
Speaker Change: For the quarter core operating income was $2 3 billion.
Speaker Change: The tax benefit.
Speaker Change: $5 54 per share up 36, and 39% respectively.
Speaker Change: The one time tax benefits and added $1 1 billion.
For 2.2 dollars 76 a share.
Speaker Change: Our underwriting.
Speaker Change: Performance in the quarter was the result of stronger and premium growth.
Excellent underwriting margins with the published a combined ratio of 85 five at a current accident year of $84 three we.
Speaker Change: We had strong prior period reserve development in both North America, and overseas General and relatively light cat losses.
Speaker Change: Nancy underwriting income for the quarter was one 5 billion.
Speaker Change: Our prior year reserve development in the quarter and for the year.
Speaker Change: 177, and $773 million respectively.
Speaker Change: Speaks to the consistent strength of our loss reserves.
At year end, our loss reserves, where an exceptionally strong position.
Speaker Change: Strong as they have ever been.
Speaker Change: On the invested asset side record adjusted net investment income of one $5 billion was up $369 million or 33% over prior year.
Our portfolio yield at the end of the year was four 3% versus $3 six a year ago.
Speaker Change: Reinvestment rate is currently averaging five 3% we.
Speaker Change: We have very strong liquidity in our investment income run rate continues to grow as we invest reinvest our cash flow at higher rates.
Peter will have more to say about financial items now.
Peter: Now turning to growth pricing and the rate environment.
Peter: Holiday did net written premiums for the company increased over 13% for the quarter.
With PNC up 12, 5%.
Peter: Life up 20%.
Peter: Of the PMC 12, and a half.
Peter: <unk> lines were up 20% and commercial P&C was up 10%.
In fact stronger than the full year average of eight 6%.
Peter: Our premium revenue growth in the quarter was well spread globally.
Peter: And from a broader perspective for the full year growth was 13, 5% with P&C uptime on LIFO, 52%.
Peter: Again, Chubb is a globally diversified company.
Peter: And our growth last year demonstrates the broad based nature.
Peter: Although our operations North America commercial P&C are very large and important business, representing 40, 40% of the company grew 75%.
Peter: The balance of the company the other 60% grew 18%.
Peter: <unk> net worth personal lines grew 11 international consumer P&C grew 18 international commercial P&C grew over 11% and lights grew 52%.
Peter: In terms of the commercial P&C rate environment. This pattern was the same.
Peter: As we have experienced all year price increases in the quarter and property and casualty lines exceeded loss cost in both North America and our International Division.
Peter: Globally rates and prices continued to decrease and financial lines led by DNO.
Peter: Get into the detail for the quarter and beginning with North America.
Peter: Premiums were up nine 4% were $6 two excluding agriculture.
Consisted of growth of 12, one in person personal insurance and four four in commercial insurance.
Peter: Within the floor for P&C lines were up six three and financial lines were down two 8%.
Peter: Unpacking, the four four which was obviously slower than previous quarters first our middle market Division had another strong quarter with PMC premiums up nine 8%.
Peter: Financial lines were essentially flat.
Our E&S business had a strong quarter with growth of 16% and our wholesale brokerage lines.
Peter: On the other half are division, which serves large corporates major rig counts grew only one 4%.
Peter: Growth in major was adversely impacted by about seven five points or $125 million of premium from underwriting actions. We plan for and took in a segment of our primary and excess casualty business.
Peter: One half of the reduction in premium was the result of increased client retentions.
Peter: The balance due to loss business for clarity. These actions in fact contribute to future growth and underwriting income.
Peter: Regarding future North America commercial growth.
Peter: As we said in the press release, given current market conditions, and our capabilities across all segments of commercial P&C, including large accounts E&S in middle market, we fully expect to return to more robust growth beginning with the first quarter.
Peter: Overall pricing for total North America commercial increased seven 3%, including rate of five one and exposure changed it acts like rate of $2 one let.
Speaker Change: Let me provide a bit more color around rates and pricing.
Speaker Change: I think for commercial property and casualty was strong up 12, 4%.
Speaker Change: Property pricing was up 17 three.
With rates up $12, nine and exposure change of $3 nine.
Speaker Change: Pricing in North America was up 12, 4% with rates up 10 eight.
Speaker Change: And exposure up one four.
Speaker Change: In workers comp, which included both primary and large account risk management pricing was up four 6% with rates up one one <unk>.
Speaker Change: And exposure up three 5%.
Speaker Change: We are trending loss costs in North America at six 6% with short tail classes at five and a half and long tail excluding comp.
Speaker Change: Seven three.
Speaker Change: Our trending our first dollar workers' comp book at four 6%.
Speaker Change: For financial lines, the underwriting environment remains aggressive.
Speaker Change: Particularly in Vietnam.
Speaker Change: And rates continue to decline.
Speaker Change: We know this business extremely well and our trading growth for underwriting March had income where we need to.
Speaker Change: In the quarter rates and pricing for North America financial lines in aggregate were down $6, one and five five respectively. We.
Speaker Change: We are trending financial lines loss cost at five 1%.
Speaker Change: For our agriculture business late season drought related developments in crop insurance resulted in an elevated combined ratio for the quarter and the year.
Speaker Change: For context, we published the $95 four combined ratio through the year and earn an underwriting profit of $146 million.
Speaker Change: Similar to the previous year's results.
Speaker Change: Crop insurance is a cat like business by its nature vulnerable to weather volatility.
Speaker Change: With very good risk reward dynamics, if managed well.
Speaker Change: Insurance has been a great business for Chubb.
Speaker Change: Rain and hail is an amazing company and since acquiring them in 2010.
Speaker Change: About $1 1 billion.
Speaker Change: We burned almost 2 billion and operating profit with an IRR of 26%.
Speaker Change: On the consumer side of North America, our high net worth personal lines business had a simply outstanding quarter and year.
In the quarter premiums were up over 12%.
Speaker Change: Our new business growth was up 34%.
Speaker Change: There was a continued flight to our product service and capability.
Speaker Change: We are the gold standard period.
Again for the year the business grew almost 11% and published a combined ratio of 89 seven.
Speaker Change: 81% on a current accident year ex cat basis.
Speaker Change: Our homeowners business, we achieved pricing of 17% in the quarter, while our selected loss cost trend remained steady 10, 5%.
Speaker Change: Turning to our international General insurance operations, which had an outstanding quarter net premiums were up 19, 3%.
Speaker Change: The combined ratio was 85 nine <unk>.
Our international commercial business grew 13, 2%, while consumer was up 29, and a half for the year overseas General grew 14%.
Speaker Change: In our international business growth this quarter was broad based with all major regions producing double digit growth again, illustrating the global nature of the company.
Speaker Change: Asia led the way with premiums up 37%.
Speaker Change: Commercial lines growth of 21% and consumer up 56%.
Speaker Change: Europe, and Latin America had very strong quarters, as well with growth of 15 year and a half about for both.
Speaker Change: We continue to achieve improved rate to exposure across our international commercial portfolio with.
Speaker Change: Pricing in our retail business up over 7%.
Speaker Change: Property and casualty line pricing was up over time, while financial lines pricing was down about 2%.
Speaker Change: Loss cost inflation across our international retail commercial portfolio is trending at five eight.
Speaker Change: P&C lines trending six and financial lines trending four 9%.
Speaker Change: Within our international consumer P&C business, our A&H in personal lines conditions, both had strong quarters and for the year. Their growth was 14, 4% and 21, 4% respectively growth again was led by Asia.
Speaker Change: In our international life insurance business, which is basically Asia premiums were up 26% for.
Speaker Change: For the year, we reported LIFO income of just over $1 billion.
Speaker Change: Or about $950 million adjusting for some nonrecurring items.
So in summary.
Speaker Change: We had a simply outstanding quarter contributing to another record setting year.
Speaker Change: And we are well positioned to continue producing outstanding results going forward.
Speaker Change: Underwriting conditions overall are favorable to build a vary by business and geography.
Speaker Change: <unk> market and that's what we are.
Speaker Change: We have hit the ground running in 2004.
Speaker Change: While we are in the risk business.
Speaker Change: Volatility is a feature of that we are confident in our ability to continue growing operating earnings.
Speaker Change: A double digit pace through PNC revenue growth and underwriting margins investment income licensing cost now.
Speaker Change: Now I'll turn the call over to Peter <unk>.
You can come back thank you for your questions.
Peter: Good morning.
Peter: As you've just heard from even our strong performance continued into the fourth quarter and.
Peter: And we ended the year with record results in all three sources of earnings.
Peter: P&C underwriting income investment income in life income.
Operator: Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the CHUBB Limited 4th Quarter 2023 Earnings Conference. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad.
Peter: Additionally, our book value of nearly $60 billion and book value per share of $146 83.
Peter: Both all time highs.
Peter: Yes.
Speaker Change: Before I go into further detail on our results I want to touch on the 114 billion, one time deferred tax benefit recognized in the quarter.
This tax benefit as a result of the Bermuda corporate income tax law enacted in December which requires a onetime step up of the tax basis for assets in terms of units at fair value.
Operator: If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Karen Beyer, Senior Vice President, Investor Relations. Please go ahead.
Speaker Change: This one time benefit represents a permanent increase to book value and tangible book value and will be realized over a 10 year period starting in 2025.
Karen L. Beyer: Thank you and welcome everyone to our December 31, 2023 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, growth 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.shove.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.
Speaker Change: Please refer to page, one b and the financial supplement for the impact of this benefit on our key metrics.
Speaker Change: During the quarter per share book and tangible book value increased 12, 2% and 22% excluding the tax benefit.
Speaker Change: This increase reflects strong operating results and net realized and unrealized gains of $4 9 billion and our investment portfolio due to declining interest rates, partially offset by $1 1 billion of dividends and share repurchases.
Speaker Change: Okay.
Speaker Change: But the whole year book and tangible book value per share increased 18, 2% and 17, 5% excluding the tax benefit.
Evan G. Greenberg: Now I'd like to introduce our... First, we have Evan Greenberg, Chairman and Chief Executive Officer, followed by Peter Enns, our Chief Financial Officer, and 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.
Speaker Change: The increase also included the dilutive impact on the tangible equity related to <unk> consolidation on July one which has since been fully recovered.
Speaker Change: Turning to investments our portfolio grew over 20% since last year, reaching $137 billion at year end and benefiting from record full year adjusted operating cash flows of $12 2 billion.
Evan G. Greenberg: Good morning. We had an outstanding and exciting finish to the year. Factor Records. Our quarter's results included double-digit premium growth, record PNC underwriting, and investment in. Strong, Life Operating A, All leading to exceptional operating earnings on both the per share and dollar basis. Our results, both earnings and book value related, were also positively impacted in a significant way by a one-time deferred tax benefit related to Bermuda's new income tax. Well, the quarter's results are impressive and important, the full year result that really matters most. All things being equal, one quarter tells hardly a story.
Speaker Change: And the addition of <unk> portfolio of approximately $7 million net to Chuck.
Speaker Change: In addition, we experienced unrealized gains on our portfolio during the year of $3 1 billion, which again highlights the transient nature of these mark to market movements are a high quality fixed income portfolio.
Speaker Change: This year, we continued to take advantage of an attractive interest rate environment, raising our portfolio yield to four 3% our highest since the third quarter of 2011.
Speaker Change: Our adjusted our adjusted net investment income of $1 $49 billion in the quarter included approximately $55 million of higher than normal dividend income in private equity distributions.
Looking ahead, we expect our quarterly adjusted net investment income to have a run rate of approximately 145 billion and to go up from there.
Evan G. Greenberg: Our full year results were simply stunning. Core operating income top $9.3 billion, up 45%, or $8.2 billion excluding the tax benefit, up 28%. PNC underwriting income was a record five and a half billion dollars, with a combined ratio of 86.5%. And investment income was up 33%, and Tom 5.3 billion. As you can see, the balance between underwriting income and investment income was about 50-50. A very healthy
Speaker Change: Turning to our underwriting business.
Speaker Change: For the quarter, we had pretax catastrophe losses of $300 million.
Speaker Change: From weather related events split, 74% in the U S and 46% internationally.
Prior period development in the quarter and our active businesses was a favorable $323 million pretax 81% in short tail lines predominantly from property and 19% in long tail lines.
Speaker Change: Our corporate run offline had adverse development of $146 million pre tax, including $99 million asbestos related.
Evan G. Greenberg: Life income was over $1 billion, while consolidated premium revenue growth was 13.5% for the year. For the year, our core operating ROE was 15.4%. And I'll return to Tamsu.
Speaker Change: Our paid to incurred ratio for the year with 87%.
Our reported effective tax rate was favorably impacted by the deferred tax benefit mentioned earlier, excluding the tax benefit our core operating effective tax rate would have been 17% for the quarter and 18, 2% for the year slightly below our guided range, reflecting higher income and some low.
Evan G. Greenberg: 24.2%, the tax benefit contributed. So excluding that, our RO, our core operating ROE was 13.6. And our tangible ROE is 21.6%. Excellent numbers. Finally, for the year, per share of intangible book value, each group increased by over 20%. All divisions of the company in major geographies contributed to these outstanding results last year. And I want to congratulate and thank my colleagues around the globe. Our results speak to the global nature of this organization, which is one of the things that distinguishes Charles. Our fundamentals are very strong, and the quarter itself was simply a continuation of the year. For the quarter, core operating income was $2.3 billion, excluding the tax benefit.
Speaker Change: Tax jurisdictions as well as the impact of certain employee related benefits due to rising equity markets.
Speaker Change: We expect our annual core operating effective tax rate for calendar 2024 to be in the range of $18 75 to $19 two 5% I'll now turn the call back over to Karen.
Karen L. Beyer: Thank you at this point, we're happy to take your questions.
Karen L. Beyer: Thank you 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.
Karen L. Beyer: Your first question comes from the line of Mike Zaremski with BMO capital markets. Please go ahead.
Mike Zaremski: Hey, good morning. Thanks.
Mike Zaremski: Maybe first question on.
Mike Zaremski: Loss cost trend and we always appreciate all the granular color you guess.
Evan G. Greenberg: $5.54 per share, up 36% and 39%, respectively. The one-time tax benefit then added $1.1 billion. $2.2 dollars and 76 cents a share. Our underwriting performance in the quarter was a result of strong earned premium. Excellent underwriting margins with a published combined ratio of 85.5 and a current action per year of 84.3. We had strong prior period reserve development in both North America and overseas general and relatively light catwalk. PNC's underwriting income for the quarter was $1.5 billion.
Mike Zaremski: North America it looks like.
Mike Zaremski: Short tail loss trend came down a little bit, whereas the long tail loss cost trend, just inched up a little bit higher and they fill on that.
Mike Zaremski: If I look back over longer periods of time, the long tail loss trend is.
Mike Zaremski: They are actually been inching higher.
Mike Zaremski: For.
Speaker Change: Yes, now I guess ex the.
Speaker Change: The onset of the pandemic potentially.
Speaker Change: But just curious the underwriting results excellent.
Very clear that you feel like this is a good underwriting environment. What gives you comfort that that if the long tail loss inflation continues kind of inching higher that this is still a.
Speaker Change: Great underwriting environment.
Evan G. Greenberg: Our prior year reserve development in the quarter and for the year was $177.773 million, respectively, which speaks to the consistent strength of our loss reserve. At year-end, our loss reserves were in an exceptionally strong position, as strong as they have ever been. On the invested asset side, record adjusted net investment income of $1.5 billion was up $369 million, or 33% over prior years. Our portfolio yield at the end of the year was 4.3 percent versus 3.6 percent a year ago, and our reinvestment rate is currently averaging 5.3 percent. We have very strong liquidity, and our investment income run rate continues to grow as we reinvest our cash flow at higher rates. Peter will have more to say about financial aid.
Speaker Change: In the year to come.
Speaker Change: Well look there is some.
Speaker Change: There is no certainty.
Speaker Change: Guaranteed.
Speaker Change: Our loss cost trend and casualty when I look at it.
Speaker Change: Has been reasonably steady over the year.
Speaker Change: Yes.
Speaker Change: Youll say it inched up really more on on mix of business.
Speaker Change: Anything else when I look at the individual cohorts.
Speaker Change: Okay.
The vast majority of units.
Speaker Change: It's not a material change.
Speaker Change: So and we have a lot of visibility on loss costs.
<unk>.
Speaker Change: There are some pockets that has been more elevated over the last number of years.
It's nothing new.
Speaker Change: <unk> spoken about it continuously.
But overall I think casualty loss cost trends, while they are elevated due to the external environment as we understand it to be.
Evan G. Greenberg: Now turning to growth, pricing, and the rate environment. Consolidated net written premiums for the company increased over 13% in the quarter. PNC up 12.5% and LIFE up 22%. Of the PNC 12 12, consumer lines were up 20%, and commercial PNC was up 10%, which is, in fact, stronger than the full year average of 8.6%. Our premium revenue growth in the quarter was well spread globally. And from a broader perspective, for the full year, growth was 13 and a half percent.
Speaker Change: Is reasonably steady.
Speaker Change: And so that's what gives me a lot of confidence about.
Speaker Change: Okay.
Speaker Change: That's helpful color.
Speaker Change: Lastly in my follow up.
Speaker Change: Yes.
Speaker Change: With great earnings levels, maybe Peter or Avenue, you can update us on the drag from excess capital and whether we should be just kind of continuing to deploy a mixed dividend.
Speaker Change: To buybacks and then.
Speaker Change: <unk> some for.
Speaker Change: Opportunistic.
Peter: M&A, if theres really no change to that.
Avenue: So we had disclosed I think on the last call the drag by showing the difference.
Evan G. Greenberg: PMC up 10 and LIFE up 52%. Again, Chubb is a globally diversified company, and our growth last year demonstrates the broad-based nature of our operations. North America Commercial PNC, a very large and important business, representing 40% of the company. Group, 7.5%, the balance of the group.
Avenue: Reported ROE and I would say.
Avenue: It's up somewhat from there just reflecting a combination of new S&P models and some other factors.
Avenue: It's somewhat above modestly above what we reported last quarter.
Thank you.
Speaker Change: Fair enough.
Evan G. Greenberg: The other 60% grew 18%. U.S. High Net Worth Personal Lines grew 11%, International Consumer PNC grew 18%, International Commercial PNC grew over 11%, and Life grew 52%. In terms of the commercial PNC rate environment, the pattern was the same as we have experienced all year, with price increases in the quarter and property on casualty. Exceeded loss costs in both North America and our international division while, globally, rates and prices continue to decrease in financial lines led by DNO. Getting to the details of the quarter, and beginning with North America, premiums were up 9.4% or 6.2 excluding, Consistent with growth of 12.1% in personal insurance. 4.4, and Commercial Insurance. Within the 4.4, PMC lines were up 6.3, and financial lines were down 2.1. Unpacking the 4.4, which was obviously slower than previous quarters, first, our middle market division had another strong quarter with PMC premiums up 9.8 percent. Well, financial lines were essentially flat.
Speaker Change: Thank you. Your next question comes from the line of David Motioned Madden with Evercore ISI.
Speaker Change: Please go ahead.
Speaker Change: Okay.
Speaker Change: Hi, Thanks, good morning.
I just had a question around some of the moving pieces on the reserve releases in North America commercial.
And if there was any impact from some of the corrective actions on on reserves.
Speaker Change: There was.
Speaker Change: No.
Speaker Change: Connection in the reserve.
Speaker Change: <unk>.
Speaker Change: Two the underwriting actions.
Speaker Change: I flagged in my commentary and that listed in the press release.
Speaker Change: Yes.
Speaker Change: And by the way there was.
Speaker Change: Another question.
So I've noticed was our loss ratio in the quarter impact.
Speaker Change: By those changes now.
Speaker Change: I'll remind everyone loss ratio is based on earned premium.
Speaker Change: Britain trigger.
Speaker Change: And so.
So any.
Speaker Change: Benefit we might see which is very very modest look at the size of our commercial business.
Speaker Change: We're talking about premium impact of $125 million.
Speaker Change: So you think of the loss ratio impact from act very minor.
But still to contribute.
Speaker Change: Wherever you see something that isn't.
Speaker Change: Price right, we're structured right.
Speaker Change: Uh huh.
It's axiomatic in P&C you addressed.
Speaker Change: Right Okay.
Speaker Change: Helpful and I appreciate that on the on the go forward impact.
Speaker Change: Yes.
Speaker Change: And then I guess just my follow up question.
Evan G. Greenberg: Our E&S had a strong quarter with growth of 16% in our wholesale brokerage. On the other hand, our divisions which serve large corporates, major accounts, grew only 1.4%. Growth in major business was adversely impacted by about 7.5 points, or $125 million of premium, from underwriting actions we planned for and took in a segment of our primary and excess casualty business. One-half of the reduction in premium was the result of increased client retention, with the balance due to lost business.
Speaker Change: Just on the on the.
Speaker Change: In North America, commercial and your expectations for 2024.
Wondering maybe if you could just talk I saw the casualty rates ticked up nicely in the quarter, but overall rate is down I guess would you expect.
Speaker Change: Growth if I were to look at 2020, 375% growth in North America commercial.
Speaker Change: Sure.
Would you think the environment is good enough to produce higher growth than that or lower growth or I guess, how are you thinking about it for 2024.
Speaker Change: David Nice try I don't give guidance as you as you know around any of that.
Speaker Change: The seven and half is an interesting.
Evan G. Greenberg: Clarity, these actions will actually contribute to future growth in underwriting income. Regarding future North American commercial growth. As we said in the press release, Given current market conditions and our capabilities across all segments of commercial PNC, including large accounts, ENS, and middle market, we fully expect to return to more robust growth beginning with the first quarter. Overall pricing for total North America commercial increased 7.3 percent, including a rate of 5.1 and exposure change that acts like a rate of 2.0. Let me provide a bit more color around rates. Pricing for commercial property and casualty was strong, up 12.4%. Property pricing was up 17.3.
Speaker Change: Look at the growth rate prior to the fourth quarter action.
David Madden: It was more robust than that.
David Madden: And.
David Madden: Our thinking starts from there and then you think about.
David Madden: When you said about the the.
David Madden: The rate action.
Speaker Change: Yes casualty was better.
Speaker Change: Property and short tail classes, where therefore down a little bit.
Speaker Change: My got strong double digit growth.
Speaker Change: In property related lines.
Speaker Change: Rates and pricing.
Speaker Change: And which is keeping pace with.
Speaker Change: Values.
Speaker Change: With that exposure changes stock keeping pace with values.
Speaker Change: <unk>.
Speaker Change: And so it's.
Speaker Change: It's a well priced business and well priced book and Youre getting rate on rate on rate.
Speaker Change: So of course, that's kind of slowed down, but the underwriting environment for it.
Speaker Change: And.
Speaker Change: The rate to exposure the risk reward is.
Speaker Change: Quite good.
Speaker Change: The balance sheet.
Evan G. Greenberg: With rates up 12.9 and an exposure change of 3.0, casualty pricing in North America was up 12.4%. With rates up 10.8 and exposure up 1.4, and Workers' Comp, which includes both primary and large-account risk management, pricing was up 4.6 percent. With rates up 1.1 and exposure up 3.5%, we are trending loss costs in North America at 6.6 percent. Short-tail classes at 5.5, and long-tail, excluding comp, at 7.3.
Speaker Change: You have the ability to take on the exposure and the confidence how should we do.
Speaker Change: I feel very good about North America as we go forward.
Speaker Change: So well underwritten business.
Speaker Change: Understood. Thank you.
Speaker Change: Youre welcome.
Speaker Change: Thank you. Your next question comes from the line of Gregory Peters with Raymond James Please.
Gregory Peters: Please go ahead.
Gregory Peters: Well good morning.
Gregory Peters: In the press release and in your comments you mentioned, the fact that chubb's loss reserves are strong, let's say I've ever been.
Gregory Peters: So I'm curious what metrics youre looking at to make that.
Gregory Peters: Determination and the reason why I'm I guess I'm asking us.
Gregory Peters: Kind of considered chubb to always have strong reserves on.
Gregory Peters: What's is there something that's changed inside your reserving philosophy or structure that gives you confidence that they are better now than they have been in previous years.
Evan G. Greenberg: We are trending our first dollar workers' comp book at 4.6 percent. For financial lines, the underwriting environment remains aggressive, particularly in DNI.
Speaker Change: No nothing has changed in that regard.
Speaker Change: You go through different underwriting environment.
Speaker Change: And.
Evan G. Greenberg: The rates continue to decline. We know this business extremely well and are trading growth for underwriting margin and income where we need to. In the quarter, rates and pricing from North America financial lines were down 6.1 and 5.5, respectively.
Speaker Change: And.
Speaker Change: Yes.
Speaker Change: Okay.
The loss costs that is earned out over the years I look at the mix of business.
Speaker Change: I look at our data and insight.
Speaker Change: As the company has grown.
Speaker Change: And frankly I just.
Evan G. Greenberg: We are trending financial lines loss costs at 5.1 percent. For our agriculture business, late season drought-related developments in crop insurance resulted in an elevated combined ratio for the quarter and the year. For context, we published a 95.4 combined ratio for the year and earned an underwriting profit of $146 million, which is similar to the previous year's results. Crop insurance is a cat-like business, vulnerable to weather volatility but with very good risk-reward dynamics if managed well. Crop insurance has been a great business for jobs. Rain and Hail is an amazing company, and since acquiring them in 2010 for about 1.1 billion dollars.
Speaker Change: All the loss Reserve studies, we do.
Speaker Change: And then independently reviewed by external actuaries and by Auditor's and I look at the.
Speaker Change: At the end result, and the strength of it.
Speaker Change: It's a very simple statement to make when I look back at it.
Speaker Change: Okay.
Speaker Change: Track it for years that our reserves are as strong and as robust as we have ever seen.
Speaker Change: Okay and then.
Speaker Change: Another call out you talked about the large account excess casualty business.
Speaker Change: And I know you provided some color on your comments, so just looking for a little bit more detail.
Speaker Change: There's obviously been noise in the market about casualty and maybe just excess casualty is one of the sensitive subjects, that's hitting the marketplace, but any additional color there would be helpful.
Evan G. Greenberg: We've earned almost $2 billion in operating profit with an IRR of 26%. On the consumer side of North America, our high-network personal lines business had a simply outstanding quarter and year. Carter
Speaker Change: Sure Greg.
Speaker Change: <unk>.
Speaker Change: Yes.
Speaker Change: If you look back over time.
Some of the things that I have sac.
Speaker Change: And I'm going to repeat them, because I think right.
Evan G. Greenberg: Premiums were up over 12%, and new business growth was up 34%. There is a continued flight to our product, service, and capability. We're the gold standard.
Maybe to some degree for some people that go into one year out the other and then there are moments where it.
Speaker Change: It really sticks.
Speaker Change: When you.
Speaker Change: Look at the external litigation environment.
Evan G. Greenberg: Period. Again, for the year, the business grew almost 11% and published a combined ratio of 89.7, or 80.1% on a current accident, your X-CAT base. In our homeowner's business, we achieved pricing of 17% in the quarter, while our selected loss cost trend remained steady at 10.5%. Turning to our International General Insurance Operations, which had an outstanding... Net premiums were at 19.3%, and the combined ratio was 85.9. Our international commercial business grew 13.2%, while our international consumer business was up 29.5%.
Speaker Change: Yeah.
Speaker Change: The target.
Speaker Change: First and foremost this corporate demand.
Speaker Change: Not <unk>.
Speaker Change: More business not.
Speaker Change: Mid size business larger business.
Speaker Change: General attitude.
Speaker Change: Among.
Speaker Change: Segments of the population against corporations.
Speaker Change: Trial bar.
Speaker Change: We'll be shortening.
Speaker Change: They're going to you're asking why are you Rob banks, you said, because thats, where the money is.
Speaker Change: And so they go after large corporations and.
Speaker Change: And.
Speaker Change: Number two.
Speaker Change: Number three.
Evan G. Greenberg: For the Year, Overseas General Group 14% and our international business growth this quarter was bright, with all major regions producing double-digit growth. Again, illustrating the global nature of the company. Asia Led the Way. Premium was up 37% made up of commercial lines growth of 21% and consumer up 56%. Europe and Latin America had very strong borders as well, with growth of 15.5% about for both.
Speaker Change: We know there has been a trend.
Speaker Change: <unk> increased frequency of severity.
Speaker Change: Which should both primary but excess casualty.
Speaker Change: And also new.
Speaker Change: Talking about it for quite some time.
Speaker Change: And then there is a lot of visibility.
Speaker Change: It.
Speaker Change: Particularly acute.
Speaker Change: In exposure.
Speaker Change: Has wheels anything with wheels.
Speaker Change: It could be logistics companies trucking companies.
Speaker Change: Buddy Who's got fleets and the larger the vehicles in the fleet.
Evan G. Greenberg: We continue to achieve improved rate-to-exposed across our international commercial portfolio. Pricing and our retail business of over seven, Property and Casualty line pricing was up over 10, while financial lines pricing was down about. Lost cost inflation across our international retail commercial portfolio is trending at 5.8. PNC lines trending six and financial lines trending 4.9 percent within our International Consumer PNC. Our A&H and personal lines could... Both had strong quarters, and for the year, their growth was 14.4% and 21.4%, respectively.
Speaker Change: The more the more of a target.
Speaker Change: And has it been.
Speaker Change: That's what you are.
Speaker Change: That story has continued.
Speaker Change: And.
Speaker Change: There's been inflation in both frequency and severity and not nothing new.
Speaker Change: <unk>.
And that is the theme.
Speaker Change: In large accounts.
Speaker Change: It's pretty focused.
Speaker Change: And directed does it mean balance of casualty Johnson.
Elevated loss cost, which has been I, just addressed which has had a lot of visibility in this study.
Speaker Change: Yeah.
But.
It has been more acute.
Speaker Change: An isolated segments.
Evan G. Greenberg: Growth, again, was led by Asia; in our International Life Insurance business, which is basically Asia, premiums were up 26% year-on-year to the year we reported life income of just over $1 billion, for about $950 million, adjusting for some non-recurring items. So, in summary... We had a simply outstanding quarter, contributing to another record-setting year, and we are well positioned to continue producing outstanding results going forward. Underwriting conditions are overall favorable, though they vary by business and geography.
Speaker Change: Great. Thanks for the detail.
Speaker Change: Youre welcome.
Speaker Change: Okay.
Speaker Change: Thank you. Your next question comes from the line of Ryan Tunis with Autonomous Research. Please go ahead.
Ryan J. Tunis: Hey, Thanks, good morning.
Ryan J. Tunis: Just I guess following up.
Ryan J. Tunis: With the large account space, So I guess.
Ryan J. Tunis: I've always thought about that as a business you guys had a competitive advantage not a lot of players that can write the primary casualty the primary D&O.
Ryan J. Tunis: But it's clearly been a place frustrated you more recently I'm just curious.
Ryan J. Tunis: There is no risk here than any of the actions you are taking could somehow.
Evan G. Greenberg: It's an underwriter's market, and that's what we are. We have hit the ground running in 24, and while we are in the risk business, volatility is a feature of that. We are confident in our ability to continue growing operating earnings at a double-digit pace through PNC Revenue and underwriting boards. Lightfoot.
Ryan J. Tunis: Change the significant strategic.
Ryan J. Tunis: Strategic significance to that franchise several years down the road is there.
Oh My God knows.
Ryan J. Tunis: Year over thinking.
No.
Tom: And this is Tom.
If you look at the actions that we just flagged alpha.
Tom: Half of it is exposure change.
Peter Enns: Now I'll turn the call over to Peter, and then we're going to come back and take your questions. Good morning. As you just heard from Evan, our strong performance continued into the fourth quarter, and we ended the year with record results in all three sources of earnings. Dean's Underwriting Income, Investment Income, and Life Income. Additionally, our book value of nearly $60 billion and book value per share of $146.83 were both all-time highs. Before I go into further detail on our results, I want to touch on the $1.14 billion one-time deferred tax benefit recognized in the court. This tax benefit is a result of the Bermuda Corporate Income Tax Law enacted in December, which requires a one-time step-up of the tax basis for assets in Bermuda to fair value.
Tom: And.
Half of it is additional.
Tom: Written premium.
Tom: We lost.
Tom: Since then by the way the market.
Tom: It is beginning to catch up to similar acts.
Tom: Actions.
Tom: And.
Speaker Change: No impact to the franchise.
Strong Lake.
Speaker Change: Phil are you willing to write a book of business. So the very large very healthy book.
Speaker Change: Yeah.
Phil: Under the agreement.
And then I guess my follow up is just on Monday, Sean can match.
Speaker Change: I'm sorry.
Speaker Change: I'm sorry, Brian Sorry go ahead.
Brian: Go ahead, sorry about that.
Brian: No I just editorialize.
Brian: That's why it gives you an amount of money.
Brian: And told you how well it is just a fraction.
Brian: Understood.
Speaker Change: And then my follow up just on the property side and Im thinking more wholesale the question certainly cat exposed property.
Speaker Change: Late in 2003.
Speaker Change: How are you thinking how you're thinking about the rate adequacy in our business.
Peter Enns: This one-time benefit represents a permanent increase in book value and tangible book value and will be realized over a 10-year period starting in 2025. Please refer to page 1B in the financial supplement for the impact of this benefit on our key metrics. During the quarter, per share book and tangible book value increased 12.2% and 20.2%, excluding the tax benefit. This increase reflects strong operating results and net realized and unrealized gains of $4.9 billion in our investment portfolio due to declining interest rates, partially offset by 1.1 billion of dividends and share repurchase. The full year book and tangible book value per share increased 18.2% and 17.5%, excluding tax payers.
Speaker Change: After that huge rate all we got last year.
I think it is.
Radar adequacy is strong.
Speaker Change: Quite strong.
Speaker Change: I'm not going to go into any more detail other than to say that.
Speaker Change: And.
Speaker Change: And we triangulated numerous ways.
Speaker Change: But it's quite strong from everything we know.
Speaker Change: All the models and the balance of input and our analysis of the portfolio.
Speaker Change: Occupancies geographies, it's in parallel so its exposed to.
Speaker Change: Yes, they roll off we feel very good about that book of business. If you want to know more youre going to have to join the company.
Speaker Change: Okay.
Speaker Change: That was it Joe Brian.
Brian Meredith: Thanks, Ed.
Brian Meredith: Thank you. The next question comes from the line of Meyer Shields with K B W.
Peter Enns: The increase also included the diluted impact on the tangible equity related to Wattai consolidation on July 1st, which has since been fully recovered. Turning to investments, our portfolio grew over 20% since last year, reaching $137 billion at year-end and benefiting from record full-year adjusted operating cash flows of $12.2 billion and the addition of the Watteye portfolio of approximately $7 billion net to Chuck. In addition, we experienced unrealized gains on our portfolio during the year of $3.1 billion, which again highlights the transient nature of these mark-to-market movements for a high-quality fixed income portfolio.
Meyer Shields: Please go ahead.
Meyer Shields: Great. Thanks, and good morning within North American personal I was hoping to get an update as to how much of the business that sub wanted to move to E&S to actually now on E&S paper and how much opportunity there is for that ship in 2024.
Meyer Shields: Yes.
Speaker Change: I'm not going to give you a dollar amount or.
Speaker Change: A data point that way except that directionally.
Speaker Change: <unk>.
Our writing more business on E&S is growing at a rapid clip.
Speaker Change: It will continue to.
Speaker Change: Our preference is always to offer our customer first admitted.
Speaker Change: Where the states and regulation don't even allow us to tailor coverage for those who were exposed.
Peter Enns: This year, we continue to take advantage of an attractive interest rate environment, raising our portfolio yield to 4.3%, our highest since the third quarter of 2011. Our adjusted net investment income of $1.49 billion in the quarter included approximately $55 million of higher-than-normal dividend, income, and private equity distribution. Looking ahead, we expect our quarterly adjusted net investment income to have a run rate of approximately $1.45 billion and to go up from there. Turning to our underage. For the quarter, we had pre-tax catastrophe losses of $300 million, principally from weather-related events split 54% in the US and 46% international. Prior period development in the quarter in our active businesses was a favorable $323 million pre-tax. 81% of the lines were in short-tail lines, predominantly from property, and 19% in long-tail lines.
Speaker Change: In a more outsized way to catastrophes remember.
Speaker Change: Affluent people want to live in beautiful places that are right on the edge.
Speaker Change: Civilization nature.
Speaker Change: It's more cat exposed.
Speaker Change: <unk>.
Speaker Change: And where we can.
Speaker Change: Taylor.
Speaker Change: <unk>.
Speaker Change: In line with the exposure, we will use it and price it adequately.
Speaker Change: E&S and that's what we're doing.
Speaker Change: <unk>.
But again.
Speaker Change: I think that and I wish there was more flagship.
Speaker Change: Within regulation within jurisdictions.
Speaker Change: We could serve this customer base.
Speaker Change: One off a 100 million pesos.
Speaker Change: <unk> be forced to E&S to give them, what they need and they want to buy.
Speaker Change: Okay understood that's very helpful.
Speaker Change: Second question, that's sort of the same theme within agriculture or at least on the crop side can you talk about how you can manage through climate change risks when you don't have.
Peter Enns: Our corporate runoff lines had adverse development of 146 million pre-tax, including 99 million asbestos. Our pay-to-incurrent ratio for the year was 87%. The reported effective tax rate was favorably impacted by the purview of the deferred tax benefit mentioned earlier. Excluding the tax benefit, our core operating effective tax rate would have been 17% for the quarter and 18.2% for the year, slightly below our guided range.
Speaker Change: Flexibility in pricing or policy language.
Speaker Change: But there is a difference.
Speaker Change: In agriculture.
Speaker Change: And we have a ton of data we have.
Speaker Change: A couple of very fundamental advantages.
Speaker Change: Number one we.
Speaker Change: We can select risk.
Speaker Change: And so we can't determine we have to take all comers.
Speaker Change: Determine what risk to retain.
Speaker Change: And which will be which risks to share with the government.
Speaker Change: And that's what.
Speaker Change: Helps you this selection.
Speaker Change: Because what helps you.
Speaker Change: Managing to price our quarters.
Speaker Change: The second thing.
Speaker Change: Skyler.
Speaker Change: And you only get reimbursed so much the expenses out of the government program.
Peter Enns: Reflecting higher income in some low-tax jurisdictions as well as the impact of certain employee-related benefits due to rising equity markets, we expect our annual core operating effective tax rate for calendar 2024 to be in the range of 18.75 to 19.25 percent. I'll now turn the call back over to Karen. Thank you. At this point, we're happy to take your questions. Thank you. 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.
Speaker Change: Most of our scale and our technology and automation.
Speaker Change: We operate efficiently so we limit any expense related exposure to the company.
Speaker Change: That allows us to operate on a favorable risk reward.
Speaker Change: Okay. That's perfect. Thank you so much.
Speaker Change: Youre welcome.
Speaker Change: Thank you. Your next question comes from the line of Ron Qunar with Jefferies.
Yaron Kinar: Please go ahead.
Yaron Kinar: Thank you good morning, everybody.
Ron Qunar: Kevin.
Yaron Kinar: Wanted to follow up on your previous answer with regards to the E&S market and high net worth.
Yaron Kinar: And I think you said you would like to have the flexibility of us continuing to offer the product in the admitted market.
Speaker Change: What's the difference from your perspective, why would you like the admitted market over E&S.
Operator: Your first question comes from the line of Mike Zaremski with BMO Capital Markets. Please go ahead. Hey, good morning.
Speaker Change: Well, it's customer friendly.
Speaker Change: I'd.
Speaker Change: And I think just from a customer point of view.
Mike Zaremski: Thanks. You know, maybe a first question on the lost cost trend. We always appreciate all the granular detail you give.
Speaker Change: They just feel it's easier to place with us.
You don't go through you have to go through more administrative process to place. It on E&S remember there you can't just jump to your analysis, you have to be able to leap through admitted market hurdles to get the U S.
Evan G. Greenberg: So in North America, it looks like the short-tail loss trend came down a little bit, whereas the long-tail loss cost trend just inched up a little bit higher. And I feel on the, if I look back over longer periods of time, the long-tail loss trend has actually been inching higher for years now, I guess the onset of the pandemic potentially. But just curious, the underwriting results are excellent. You were very clear that you feel like this is a good underwriting environment. What gives you comfort that if the long tail loss inflation continues kind of inching higher, this is still a great underwriting environment for the year to come? Well, there's some.
And it's simpler and I think for them.
Speaker Change: From their own point of view.
Speaker Change: It's more comfortable.
Speaker Change: Now to keep it in perspective.
Speaker Change: The vast vast majority of our portfolio is admitted.
Speaker Change: And then it's on the margin right now guided is non <unk> metrics.
Speaker Change: But my point.
Speaker Change: Yes.
Speaker Change: I don't like the trend.
Speaker Change: More will go on non admitted.
Speaker Change: <unk> change continues.
Speaker Change: States.
Speaker Change: Take the wrong action to.
To try to.
Speaker Change: Hover up price.
And deflect price signals.
Speaker Change: <unk> ability to risk share.
Speaker Change: With people.
Speaker Change: The well and choose to live in places that are more exposed.
Speaker Change: AD.
Speaker Change: And I think there would it be more flexibility and recognition of that consumer base and their needs and their desires and not force them to go through all they have to go through to place on in Norfolk.
Evan G. Greenberg: There's no certain. Guaranteed by Our loss cost trend in casualty when I look at Winston-Louis State over the year, and, you know, You'll say it inched up really more on the mix of business than anything else when I look at the individual code. That's the vast majority, and it's not a material change. So, and we have a lot of visibility. Walsh.
Speaker Change: Makes sense.
Speaker Change: I appreciate that.
Speaker Change: Answer.
Speaker Change: And then if I could shift gears to China.
Speaker Change: I think you had called out about $100 billion of.
Speaker Change: That are managed in China, mostly third party capital.
Speaker Change: Just curious how youre thinking about that book in the face of I guess, some selling consumer and business sentiment in China, and maybe the equity market performance. There how do you go about.
Are you, making any shifts in how youre managing good luck with that.
Speaker Change: Yes.
Speaker Change: First of all.
Evan G. Greenberg: There are some pockets that have been more elevated over the last number of years. It's nothing new. We have spoken about it before. Cheney
Speaker Change: Let's not think of it as well.
Speaker Change: It's an asset management business that 100 billion, we have an asset management company that does.
Evan G. Greenberg: But overall, I think casualty loss costs trust. While they are elevated due to the external environment, as we understand it to be, it is reasonably steady, though elevated, and so that's what gives me a lot of confidence. Okay, that's a helpful color.
Speaker Change: Retail.
Speaker Change: Mutual fund.
And very large institutional money management.
Speaker Change: Including state pension money.
Speaker Change: It's the vast majority of it is fixed income.
Evan G. Greenberg: Um, lastly, my follow-up question, you know, with the, you know, rec, you know, with great earnings levels, maybe, Peter, or Evan, you could update us on the drag from excess capital. And, you know, whether we should be, you know, just kind of continuing to deploy a mix of it into buybacks and then, you know, hoarding some for, you know, opportunistic M&A We had disclosed, I think, on the last call, the drag by showing the difference in reported ROE.
Speaker Change: We.
Speaker Change: Underwrite.
Speaker Change: Credit exposure extremely carefully.
Speaker Change: Don't chase yield we do it.
Speaker Change: In a conservative way the way we have.
Speaker Change: Been fiduciary managers.
Speaker Change: <unk>.
Speaker Change: Our policyholders money.
Speaker Change: Now, we treat investors' money.
And.
Speaker Change: Yeah.
Speaker Change: China is a lower interest rate environment now.
Speaker Change: Equity market with a lot of volatility.
Speaker Change: Not a lot of confidence.
Speaker Change: <unk>.
Speaker Change: And the economics.
Evan G. Greenberg: And I would say, You know, it's up somewhat from there, just reflecting a combination of new S&P models and some other factors. But it's somewhat above, modestly above, what we reported last. Thank you. Thank you. Your next question comes from the line of David Motemaden with Evercore ISI. Please go ahead. Hi, thanks. Good morning. I just had a question about some of the moving pieces on the reserve releases in North America commercial and if there was any impact from some of the corrective actions on reserves. There was, No.
Speaker Change: Short term medium term future among business.
And consumer so it's.
It's not the best time to be <unk>.
Managing and trying to grow an asset management business.
Speaker Change: But.
Speaker Change: All of our thinking and plan to have that in mind.
Speaker Change: Like everything else, it's a moment in time.
Speaker Change: When.
Speaker Change: When the country returns to more rapid growth when confidence begins to come back.
Speaker Change: <unk> government.
Speaker Change: Addresses and manages.
Sentiment on the economy, a bit differently than they are today.
Speaker Change: I think over time there'll be forced to.
Speaker Change: This is a great franchise.
Evan G. Greenberg: Connection in the Reserve. Strange, to the underwriting action that I flagged in my commentary and that was in the press. And by the way, there was another question. I noticed was our loss ratio a quarter impact by those chains. No.
Speaker Change: And by the way if you look at its rankings.
Speaker Change: It's.
Speaker Change: Outstanding performance rankings in the marketplace.
Speaker Change: For each class of fixed incomes.
Speaker Change: And secondly in its size.
Speaker Change: Relative to other asset managers in China, it's actually.
Speaker Change: And that to that upper mid sized category.
Evan G. Greenberg: I'll remind everyone, the loss ratio is based on earned premium. All right. Dunn.
Speaker Change: It's a pretty cool asset.
Speaker Change: Thank you very much.
Speaker Change: Youre welcome.
Evan G. Greenberg: So, any... benefit we might see, which is very, very modest. Look at the size of our commercial business, Andrade. So you think of the loss ratio impact from it very much, but still to contribute. I don't. Wherever you see something like that,
Speaker Change: And it's capital light.
Speaker Change: Alright.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Bob <unk> with Morgan Stanley.
Bob: Please go ahead.
Bob: Hi, good morning, Mike.
Bob: My first question.
Bob: Regarding your workers comp business, you mentioned that your loss trend of about 4% is it possible to maybe unpack that a little bit between.
Evan G. Greenberg: Price, right? We're structured, right? It's axiomatic in PNC. You would trust it.
Bob: Ah severity frequency and as well as wage growth trend and then are there any severity stress points that we should pay attention to.
Evan G. Greenberg: Right, okay, that that's helpful. And I appreciate that on the go forward impact. And then I guess just on my follow-up question, just on the growth in North America commercial and the expectations for 2024. Amen.
Speaker Change: No, we're not going to unpack it between frequency and severity, it's running very steady.
Speaker Change: We recognize a higher a higher <unk>.
Speaker Change: Medical loss trend, we adjusted for that and disclose that a quarter or two ago.
Speaker Change: Workers' comp is behaving in a very steady way.
Evan G. Greenberg: I was wondering, maybe if you could just talk, you know, I saw the casualty rates, you know, ticked up nicely in the quarter, but overall, the rate is down, I guess. Would you expect, you know, growth to be, if I were to look at 2023, seven and a half percent growth in North America commercial? Would you think the environment is good enough to produce higher growth than that or lower growth? Or, more importantly, how are you thinking about it for 2024? David, nice try. I don't give guys, As you know, around any of that. You know, the seven and a half is an interesting number... You look at the growth rate prior to the fourth quarter action. Halsey, It was, it was horrible.
Speaker Change: Okay got it thank you.
My second question kind of.
Speaker Change: It is more of a geopolitical risk related question, obviously, a large large portion of their business lower still.
Speaker Change: Still performing very strong, but it feels like geopolitical risk really hasnt improved so far versus 2023 is it possible to kind of give an update in terms of how you think about the risks associated in your business.
Speaker Change: In Europe, and how you think about the broader opportunities outside the U S.
Speaker Change: Well.
I don't think the Geo political risk for Europe.
Speaker Change: <unk> business is <unk>.
Speaker Change: You.
Speaker Change: I don't think they have a political risk geopolitical risk exposure any gray.
Speaker Change: Greater funding.
Speaker Change: <unk> mentally.
Evan G. Greenberg: Our thinking starts from there, and then you think about it. When you said about the rate of action... Yes, the casualty was better.
Speaker Change: We do in the United States.
Speaker Change: And so if you're concerned for Europe.
Speaker Change: In a significant way than <unk>.
Speaker Change: You better be concerned right here at home in a manner.
Speaker Change: When I get to Asia.
Evan G. Greenberg: Property and the short-tail classes were therefore down a little bit, but I got strong double-digit growth in the property related line, Raiden Pricing, and you know which is keeping pace with values. That's what that exposure changes.
Speaker Change: I don't believe.
Speaker Change: The United States, and China are going to war.
Speaker Change: And I think all sides seek stability.
Speaker Change: And so while there is.
Speaker Change: Always tail risk.
Evan G. Greenberg: It's about keeping pace with value, and um, And so it's a well-priced business and a well-priced book, and you're getting rate on rate on rate. So, of course, that's kind of slowing down, but the underwriting environment for it, and the rate to exposure, the risk reward. It's quite good if you have the balance sheet, and you have the ability to take on exposure and confidence. I feel very good about North America.
Speaker Change: In Asia.
Speaker Change: Related to North Korea.
Related to Taiwan.
Speaker Change: In particular.
Speaker Change: I think it's more risk at this moment around someone making a mistake.
Speaker Change: By the way I'm going to leave you with this.
Speaker Change: The mental model.
Speaker Change: If there is a conflict in Taiwan.
Speaker Change: Where there is a conflict to do with North Korea.
Speaker Change: It is hard to believe it will confine itself to a small geography.
Speaker Change: We then have a major global.
Speaker Change: Issue.
Speaker Change: And I think those who are in leadership positions.
Evan G. Greenberg: So well underwritten. Understandable. Thank you. Duffield. Your next question comes from the line of Gregory Peters with Raymond James. Please go ahead.
Speaker Change: All sides.
Speaker Change: Are acutely aware of us.
Speaker Change: And date to share about their children and their branch.
Speaker Change: Okay. Thank you very much for that really appreciate it.
Evan G. Greenberg: Well, good morning. In the press release and in your comments, Evan, you mentioned the fact that Chubb's loss reserves are as strong as they've ever been. So I'm curious what metrics you're looking at to make that determination, and the reason why I guess I'm asking is I've kind of considered Chubb to always have strong reserves, so I'm, What's, is there something that's changed inside your reserving philosophy or structure that gives you confidence that they're better now than they have been in previous years? Oh no, nothing has changed in that regard. You go through different underwriting in BARC. And, and the front.
Speaker Change: Thank you. Your next question comes from the line.
Speaker Change: Elyse Greenspan with Wells Fargo.
Elyse Greenspan: Please go ahead.
Elyse Greenspan: Hi, Thanks. Good morning. My first question is on North America commercial you guys saw.
Elyse Greenspan: No a good level of accident year loss ratio improvement in the quarter I was just wondering if there was any.
Elyse Greenspan: Prior quarter to lap for the prior quarters of the year or any benefit of favorable non cat weather or was it just good core underwriting results.
Speaker Change: No there was no <unk>.
Speaker Change: True.
Evan G. Greenberg: I look at the loss costs that are earned over the years. I look at the mix of business. I look at our data and insights. As the company has grown, And frankly, I just add up all the loss reserve studies we do, and then they are independently reviewed by external actuaries and by auditors. I look at the end result and the strength of it, and it's a very simple statement to make when I look back and track it over years that our reserves are as strong and as robust as we have ever seen them. Okay, and then in another call out, you talked about the large account excess casualty business, and I know you provided some color in your comments.
Speaker Change: Current accident year true up that distorted the quarter whatsoever.
Speaker Change: It's steady and.
Speaker Change: And the improvement is a combination of change of mix of business.
Speaker Change: Which frankly at least I would think you'd notice that everywhere because it gets the more properly levered portfolios are lower that current accident year.
Speaker Change: Our ex cat.
Speaker Change: It's going to come from for one and then number two.
Speaker Change: Beyond mix.
It's right.
Speaker Change: Excess of loss cost.
Speaker Change: Across most of the business, earning its way through.
Speaker Change: Thanks, and then.
Speaker Change: The tax rate side, Peter I know you said you gave us guidance for 'twenty four but what about in 2025, London Bermuda tax rate goes up how should we think about that impacting the tax rate that job.
Evan G. Greenberg: So just looking for a little bit more detail. There's obviously been noise in the market about casualties, and maybe this excess casualty is one of the sensitive subjects that's hitting the marketplace, but any additional color there would be helpful. Schur.
Peter: Yeah, it's too complicated and early to know in terms of how the Bermuda law will interact with whatever gets adopted in OECD, Switzerland, and the U S. We really don't have any visibility on it.
Evan G. Greenberg: Oh, you know. If you look back over time, some of the things that I have said... And I'm going to repeat them because I think they, you know, maybe, to some degree for some people, they go in one ear out the other, and then there are moments where you know it really sticks when you look at the external litigation environment. The target. First and foremost, this is a corporate, not a small business. Midshot, but larger.
Peter: Okay and then.
Peter: And then one more for you in your press release, you pointed to.
Peter: Growing operating earnings at a double digit pace.
Peter: Im assuming thats a comment if we adjust for the one off tax benefit in the quarter that you expect operating earnings can grow double digits in 'twenty four is that how we should take that comment.
Yes Elyse.
Elyse Greenspan: Thank you.
Elyse Greenspan: Youre welcome.
Elyse Greenspan: Thank you. Your next question comes from the line of Brian Meredith with UBS financial.
Evan G. Greenberg: There's a general attitude. Segments of the population against corporations. Trialbar, like Willie Sutton.
Brian Meredith: Please go ahead, yes. Thanks.
Brian Meredith: I appreciate a couple here first.
Brian Meredith: Evan is it possible to get with the benefit of including quick tie was this quarter on consolidated premiums I know you gave it last quarter and maybe on the overseas as we get a sense of kind of the true kind of organic run rate of the business.
Evan G. Greenberg: They're going to ask him why he robbed banks, he said, because that's where the money is. And so, you know, they go after large corporations and Hearn. Number, number. Number three, the We know there has been a trend of increased frequency of severity, which hits both primary but excess cash. Nothing new, been talking about it for quite some time, and then there's a lot of disability, particularly acute in exposure to anything with wheels, anything with wheels. It could be logistics companies, trucking companies, anybody who's got fleets, and the larger the vehicles in the fleet. The more of a target, and Haskell.
Evan G. Greenberg: I'm, sorry, Brian Youre kind of breaking up.
Speaker Change: I am not sure alright.
Speaker Change: Tie to benefit did that had of including it in premium growth in the quarter.
Speaker Change: What high had a premium.
Evan G. Greenberg: Benefit in the quarter, we didn't disclose it we disclosed last quarter and said from here. It's in there it was.
Speaker Change: From memory, it's just a couple of points, we'll take it offline with you but.
Speaker Change: It wasn't done we'll have we'll.
Speaker Change: We will have more color on the 10-K MD&A on on a couple of weeks.
Speaker Change: That's helpful and then Kevin second question, maybe bigger picture here.
Speaker Change: The trucking business.
Kevin: I mean, we continue to see some real bad kind of severity in the long haul trucking business is there any solution to that or is it simply just getting enough rate.
Kevin: No.
Kevin: Getting enough rate is.
Kevin: So we have to do.
Kevin: But that doesn't solve.
Evan G. Greenberg: That's what you're, That story has continued, and um, there's been inflation in both frequency and severity in that nothing new and, and that is the theme in large. And it's pretty focused. And directed.
Kevin: The problem for you know.
Kevin: American trucking, which we need to we need a healthy trucking industry.
Kevin: <unk>.
And you certainly want to take the inflation out of out of out of shipping rates and this will all contributes you end up paying for it.
Kevin: It's really a state by state solution.
Kevin: And.
Kevin: How they.
The amount of awards.
Evan G. Greenberg: It doesn't mean balance of casualty, doesn't have elevated loss cost, which has been, I just addressed, which has had a lot of visibility and is steady., https://www.youtube.com.au,,,,, Boyd, It has been more... isolated. Great, thanks for the detail. You're welcome. Thank you. Your next question comes from Ryan Tunis with Autonomous Research.
That are handed out and by the way look at simple laws like like what is the.
Kevin: Responsible.
Kevin: Liability event.
Kevin: How it varies by state.
Kevin: <unk>.
Kevin: There are states, where you may have 1% responsibility.
Kevin: And you are the deep pocket and viewer allocated 100%.
Of the cost.
Kevin: There are states that.
Kevin: There is a comparative negligence both parties are at fault.
Ryan J. Tunis: Please go ahead. Morning, Ryan. Hey, thanks. Morning. Um, just following up on the larger kind of space, I guess. I've always thought about that as a business where you guys have a competitive advantage, not a lot of players that can write the primary casualty, the primary DNL. But it's clearly been a place that's frustrated you more recently. I'm just curious.
Kevin: Look at how it varies.
Kevin: Determine who is ultimately adjudicated to pay for the cost.
Kevin: When you look at those right. There you could see a part of the problem that is occurring.
Kevin: Particularly.
Kevin: We're trucking company is is 1% were considered 2% did fall.
Kevin: Yet they are adjudicated.
Kevin: 100% of the pain and suffering an injury of that individual.
Evan G. Greenberg: There's no risk here that any of the actions you're taking could somehow change the strategic significance of that franchise several years down the road, is there? Oh my god. You're over. Thank you.
Kevin: It's a state by state problem.
Speaker Change: Got you.
Speaker Change: Asia.
Speaker Change: Look at litigation funding and look.
Speaker Change: What how many states require that you simply disclose boost funding the lawsuit.
Speaker Change: Because that has an impact on how would surely will then.
Evan G. Greenberg: No. Um, and this is. You look at the actions that we just flagged. Half of it is exposure change, and half of it is additional Written Premium that we lost. Since then, by the way, the market is beginning to catch up to similar actions, and no, no impact. It's not like we're wholesale re-underwriting our book of business. It's a very large, very healthy book, and Larry Greenberg.
Speaker Change: The injured party.
Speaker Change: They always March out the most sympathetic individuals.
Speaker Change: But is it all about sympathy to the individual or are they used as a prop.
To actually get a big payday for somebody who is funding the lawsuit.
Speaker Change: It's a state by state.
Speaker Change: And if you were looking for a federal solution.
Speaker Change: Got it.
Speaker Change: We can't even agree on a budget and we can address the deficit or entitlement spending Oregon will address this.
Evan G. Greenberg: And then, uh, I guess my follow-up is just something that's off the side. I'm sorry. I'm sorry, Ryan.
Speaker Change: When the trial bar is funding half of Congress.
Ryan J. Tunis: Sorry. Go ahead. Go ahead. Sorry about that. No, I just editorialized it.
Speaker Change: Thanks for the answer.
Speaker Change: Thanks for asking that question and lighting.
Speaker Change: Thanks.
Evan G. Greenberg: That's why I gave you an amount of money and told you how it was. It's just a fraction, understood. And my follow-up is just on the property side, and I am thinking more wholesale, like Westchester-type, cat-exposed property. Hunter Reighton, 23.
Speaker Change: Thank you.
Speaker Change: Question comes from the line of Mike Ward with Citi.
Mike Zaremski: Please go ahead.
Thanks, Good morning.
Mike Zaremski: Just curious if you had any kind of commentary around financial lines and.
Mike Zaremski: In North America, I'm wondering if you have any sort of expectation.
Evan G. Greenberg: How are you thinking about the rate adequacy in our business after that huge rate haul we got last year? I think it is radar adequacy is strong. White.
Mike Zaremski: For pricing to bottom out.
Speaker Change: No I don't I don't have an expectation.
Speaker Change: I think when.
Speaker Change: All of them.
Evan G. Greenberg: I'm not going to go into any more detail other than to say that we triangulated in numerous ways, but it's quite strong from everything we know. All the models and the balance of input and our analysis of the portfolio. Hikes in occupancies, geographies it's in, perils it's exposed to.
Speaker Change: A lot of that naive.
Speaker Change: Great capital that is trying to make some money for themselves at the expense of the balance sheets that are funding.
Speaker Change: When that all gets tired and loss cost catch up which is not far off with the level of pricing being charged and then there'll be an adjustment and chubb is there.
Evan G. Greenberg: Yeah, to roll up. We feel very good about that. If you want to know more, you're going to have to join the call. That was a joke, Ryan.
Speaker Change: We're a large writer of the business.
Speaker Change: And I don't know any boardroom, where they wouldn't rather have chop all things being equal handle their D&O.
Evan G. Greenberg: Thanks, man. Thank you. Your next question comes from the line about Meyer Shields with KBW. Please go ahead. Great, thanks, and good morning.
Speaker Change: And then by the way another problem that's growing as you look at the number of mouths to feed that get on a DNO tower right now.
Meyer Shields: Within North American Personnel, I was hoping to get an update as to how much of the business that you have wanted to move to ENS is actually now on ENS paper and how much opportunity there is for that shift in 2024. Yeah, it's um, you know, I'm not going to give you a dollar amount or, you know, a data point that way, except that, directionally, we are writing more business on ENS. It is growing at a rapid clip. It will continue to do so. Our preference is always to offer our customers first, admitted, But where the states and regulations don't allow us to tailor coverage for those who were exposed. In a more outsized way to catastrophes, remember, affluent people want to live in beautiful places that are right on the edge of civilization and nature, and it's more cat-exposed, and um, and where we can't tailor operate, In line with exposure, we'll use Ian, and price it adequately; we'll use Ian out.
Speaker Change: As the losses come.
Speaker Change: Good luck in many instances so I wish the brokers well in collecting from each of those players who now have room Morris.
Speaker Change: They wrote the business and now they have to pay the claims and they are losing money.
<unk>.
Speaker Change: Yes.
Speaker Change: This is the business there are pockets of the business that are dominant clients.
Speaker Change: This is just one of those moments.
Speaker Change: We got plenty else to do.
Speaker Change: Thanks very much.
Speaker Change: Youre welcome.
Speaker Change: Thank you.
Speaker Change: I'll now turn the call back over to Karen Beyer for closing remarks. Please go ahead.
Karen L. Beyer: Thank you everyone for joining us today, if you have any follow up questions, we'll be around to take your cost enjoyed today. Thank you.
Please wait the conference will begin shortly.
Karen L. Beyer: [music].
Evan G. Greenberg: And that's what we're doing. But again, I think that, and I wish that there was more flexibility, within regulation, within jurisdiction, so that we could serve this customer base on an admitted basis, versus being forced to ENS to give them what they need and that they want to buy. Okay, that's very helpful. The second question is sort of on the same theme. Within agriculture, at least on the crop side, can you talk about how you can manage climate change risks when you don't have flexibility in pricing or policy language?
Karen L. Beyer: Yes.
Karen L. Beyer: [music].
Karen L. Beyer: Okay.
Karen L. Beyer: [music].
Karen L. Beyer: Okay.
Karen L. Beyer: Yes.
Karen L. Beyer: [music].
Meyer Shields: Ah, but there's a difference between agriculture and food. And we have a ton of data. We do.
Evan G. Greenberg: A couple of very fundamental advances. Number one: we can select risks. And so we can determine, we have to take all comers, but we can determine what risk to retain and which risk to share with the government. And that's what helps you in this election, and it helps you in managing to price alcohol. And the second thing, we have scale.
Karen L. Beyer: Okay.
Karen L. Beyer: [music].
Evan G. Greenberg: And you only get reimbursed so much for expenses out of the government program because of our scale and our technology and automation. We operate efficiently. So we limit any expense-related exposure to the company, and that allows us to operate on a favorable risk per order.
Evan G. Greenberg: Okay, that's perfect. Thank you so much. You're welcome. Thank you. Your next question comes from the line of Yaron Kinar with Jefferies. Please go ahead. Thank you. Good morning, everybody.
Karen L. Beyer: <unk>.
Karen L. Beyer: <unk>.
Karen L. Beyer: Okay.
Karen L. Beyer: Sure.
Karen L. Beyer: Okay.
Yes.
Karen L. Beyer: [music].
Yaron Kinar: Evan, I want to follow up on your previous answer with regard to the ENS market and high net worth. And I think you said you would like to have the flexibility of continuing to offer the product in the admitted market. What's the difference from your perspective?
Karen L. Beyer: Okay.
Karen L. Beyer: [music].
Evan G. Greenberg: Why would you like the admitted market over ENS? Well, it's more customer-friendly. And I think just from a customer point of view, you know, they just feel it's easier to place with us. You don't go through, you have to go through more administrative processes to place it on E&S. Remember there are, you can't just jump to E&S; you have to be able to leap through admitted market hurdles to get to E&S. And it's simpler, and I think for them, from their own point of view, it's more comfortable.
Karen L. Beyer: Yes.
Evan G. Greenberg: Now, to keep it in perspective... They're bad. The vast majority of our portfolio, and Dan. It's on the margin right now. Snyder is not admitted.
Evan G. Greenberg: But my point is, I don't like the trip. More will go on unadmitted. Climate change continues and states... take the wrong action, try to cover up the price and deflect pricing, and Ability to Risk Share with people who have the will and choose to live in the places that are more exposed. And I think there ought to be more flexibility and recognition of that consumer base and their needs and their desires and not force them to go through all they have to go through to place on it. That makes sense.
Yaron Kinar: I appreciate the answer. And then, if I could shift gears to China, I think you had called out about $100 billion of AUM that are managed in China, mostly third-party capital. Just curious how you're thinking about that book in the face of, I guess, some weakening consumer and business sentiment in China and maybe the equity market performance there. How do you go about, are you making any shifts in how you're managing the book with that?
Evan G. Greenberg: Yeah, it's, um, first of all, let's not think of it as both. It's an asset manager. That $100 billion, we have an asset management guy. Retail, Mutual Fund, and very large institutional money management, including state pension money.
Evan G. Greenberg: The vast majority of it is fixed income. We underwrite the credit exposure extremely carefully. We don't chase yields.
Evan G. Greenberg: You do it in a conservative way, the way we've been fiduciary managers. Our policyholders' money. That's how we treat investors. All right. You know, China is a lower interest rate environment now, an equity market with a lot of volatility.
Evan G. Greenberg: Not a lot of confidence in the short term and medium term economic future among business and consumers. So, you know, it's not the best time to be managing and trying to grow an asset management business. Hoey, all of our thinking and plans have that in mind. And like everything else, it's a moment in time.
Evan G. Greenberg: When the country returns to more rapid growth, when confidence begins to come back, because the government addresses and manages sentiment and the economy a bit differently than they are today, which I think over time they'll be forced to. This is a great franchise.
Evan G. Greenberg: And by the way, if you look at its rankings, it's, it, it, it, it, it, it, it, it, it, it, Outstanding Performance Rankings in the Marketplace. For its collapse of fixed income. And secondly, in its size, relative to other asset managers in China, it's actually, you know, it's in that, it's in that upper midsize category. It's a pretty cool asset.
Evan G. Greenberg: Thank you very much. You're welcome, and it's capital light. Wright
Evan G. Greenberg: Thank you. Your next question comes from the line of Bob Hwang with Morgan Stanley. Please go ahead. Hi, good morning.
Bob Hwang: My first question is regarding your work in the comp business. You mentioned that your loss trend is about 4.6%. Is it possible to maybe unpack that a little bit between severity, frequency, and as well as wage growth trend? And are there any severity stress points that we should pay attention to?
Evan G. Greenberg: No, we're not going to unpack it between frequency and severity. It's running very steady. We recognize a higher medical loss trend, but we adjusted for that and disclosed that a quarter or two ago. Workers' Comp is behaving in a very steady way.
Bob Hwang: Okay, got it. Thank you. My second question is kind of more of a geopolitical risk-related question.
Evan G. Greenberg: Obviously, a large portion of your business is overseas, still performing very strongly, but it feels like geopolitical risk really hasn't improved so far versus 2023. Is it possible to kind of give an update in terms of how you think about the risk associated with your business in Asia and Europe and how you think about the broader opportunities outside the US? Well, I don't think the geopolitical risk for Europe and our businesses in the EU. I don't think they have a political risk, or a geopolitical risk exposure. Rager. Fundamentally different than we do in the United States.
Evan G. Greenberg: And so, if you're concerned about Europe in a significant way, and you better be concerned right here at home in America. When I get to Asia... Osborne,
Evan G. Greenberg: ...... I don't believe that the United States and China are going to war, and I think all sides seek stability.
Evan G. Greenberg: So while there is O. H. Traley's related to North Korea, related to Taiwan, in particular, I think there is more risk at this moment around someone making a mistake. By the way, I'm going to leave you with this mental model: If there is a conflict in Taiwan, there is a conflict to do with North Korea.
Evan G. Greenberg: It is hard to believe it will confine itself. Small, G.I. We then have a major global player. Smith. And I think those were in leadership positions. Schultz.
Evan G. Greenberg: Day, too. They're about their children and their grandchildren. Okay, thank you very much for that. I really appreciate it. Thank you. Your next question comes from the line of Elyse Greenspan with Wells Fargo. Please go ahead. Hi, thanks. Good morning.
Elyse Greenspan: My first question is on North America commercial. You guys saw, you know, a good level of accident year loss ratio improvement in the quarter. I was just wondering if there were, you know, any prior quarter true-ups for the, you know, prior quarters of the year or any benefit of favorable non-CAT weather, or was it just, you know, good core underwriting results? No, there were no true-ups. Current action at your true up that has distorted the quarter whatsoever.
Evan G. Greenberg: It's steady, and... And the improvement is a combination of changing the mix of business, which frankly Elyse, I would think you'd notice that everywhere because it's more property-leveraged portfolios are. Lower that car accident here, on XCAT, going to become number one, and then number two. Beyond Mix, it's...
Elyse Greenspan: It's rate is in excess of loss cost across most of the business making its way. Thanks. And then on the tax rate side, Peter, I know you said you gave us guidance for 24, but what about in 2025 when the Bermuda tax rate goes up? How should we think about that impacting the tax rate at CHUBB? Yeah, it's too complicated and early to know in terms of how the Bermuda Law will interact with whatever gets adopted in the OECD, Switzerland, and the US. We really don't have any visibility on it.
Peter Enns: Okay. And then, Evan, one more question. In your press release, you pointed to growing operating earnings at a double-digit pace. I'm assuming that's a comment that if we, you know, adjust for the one-off tax benefit in the quarter, that you expect operating earnings can grow double digits in 24. Is that how we should take that comment?
Evan G. Greenberg: Yes. Thank you. DeWolf.
Brian Meredith: Thank you. Your next question comes from the line of Brian Meredith with UBS Financial. Please go ahead. Yeah, thanks. I appreciate it.
Brian Meredith: Just first, Evan, is this possible to get with the benefit of including what Thai was this quarter on consolidated premiums? I know you gave it last quarter and maybe on the overseas this week, to get a sense of kind of the true kind of organic run rate of the business. I'm sorry Brian, you're kind of breaking up on me.
Evan G. Greenberg: Huatai, the benefit that that had of including it in premium growth in the quarter. Watch Pie had a premium benefit in the quarter. We didn't disclose it. We disclosed it last quarter and said, "From here, it's just in there." It was, you know, from memory, it's just a couple of points.
Peter Enns: We'll take it offline with you, but it wasn't done. We'll have more color in the 10K MD&A on a couple of watches. Yeah, yeah. Great. That's helpful. And then, Evan, second question, maybe a bigger picture here. The trucking business, you know, in the US, we continue to see some really bad severity in the long haul trucking business. Is there any solution to that?
Evan G. Greenberg: Or is it simply just getting enough rates? No, you know, getting enough rates is, um, that's what we have to do. Um, but that doesn't solve the problem for American Trucking, which we need a healthy trucking industry, and you certainly want to take the inflation out of shipping rates, and this all contributes to the price you end up paying. It's really a state-by-state solution.
Evan G. Greenberg: And that, you know, the amount of awards that are handed out. And, by the way, look at simple laws like, Like, who is responsible? in a liability event and how it varies by state. There are states where you may have 1% responsibility, and you're the deep pocket, and you are allocated a hundred percent of the car. There are states where there is comparative negligence, both parties are at fault, and look at how it varies, how they determine who is ultimately adjudicated to pay for the cost.
Evan G. Greenberg: When you look at those, right there, you can see a part of the problem that is occurring, particularly where a trucking company is 1% or considered 2% at fault, and yet they're adjudicated 100% of the pain and suffering and injury of that individual. That's a state-by-state problem. Look at litigation funding and look at how many states require that you simply disclose, "Who's funding the lawsuit?" because that has an impact on how a jury will then view the injured party.
Evan G. Greenberg: They always bring out the most sympathetic individuals. But is it all about sympathy for the individual, or are they used as a prop? to actually get a big payday for somebody who's funding the law? That's a state by state issue.
Evan G. Greenberg: And if you were looking for a federal solution, my God, we can't even agree on a budget. And we can't address the deficit or entitlement spending.
Evan G. Greenberg: We're going to address this, and the trial bar is funding half of Congress. Thanks for the answer. Thanks for asking that question and lighting me up.
Evan G. Greenberg: Thank you. Your next question comes from the line of Mike Ward with Citi. Please go ahead. Thanks. Good morning. I was just curious if you had any kind of commentary around financial lines and in North America and wondering if you have any sort of expectation for pricing the bottom out. No, I don't. I don't have an expectation. I think when all of this naive, hungry capital is trying to make some money for themselves at the expense of the balance sheets that are funding it. When that all gets tired, and loss costs catch up, which is not far off, with the level of pricing being charged, then there'll be an adjustment, and Chubb is there, and we're a large writer of the business, and I don't know any boardroom where they wouldn't rather have Chubb, all things being equal, handling their D&O. And by the way, another problem that's brewing is you look at the number of mouths to feed that get on a DNO tower right now.
Evan G. Greenberg: And as the losses come... Good luck. In many instances, I wish the brokers well in collecting from each of those players who now have remorse. Because they wrote the business, and now they have to pay the claims, and they're losing money.
Evan G. Greenberg: When all that happens, we're just... This is the business. There are pockets of the business that are dumb at times, and it's just one of those moments.
Evan G. Greenberg: Bye. We've got plenty else to do. Thanks very much. You're welcome. Thank you. I will now turn the call back over to Karen Beyer for her closing remarks.
Karen L. Beyer: Please go ahead. Thank you. Thank you everyone for joining us today. If you have any follow-up questions, we'll be around to take your calls. Enjoy the day. Thank you.
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