Q1 2024 Chubb Limited Earnings Call
Thank you for standing by my name is Derek and I'll be a conference operator today.
At this time I would like to welcome everyone to the Chubb Limited first quarter 2024 earnings call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there'll be a question and answer session.
If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
I would like to withdraw your question Press Star one again.
I would now like to turn the call over to Karen Beyer Senior Vice President of Investor Relations. Please go ahead.
Good morning, everyone and welcome to our March 31, 2024 first quarter earnings Conference call. Our report today will contain forward looking statements, including statements relating to company performance pricing and business mix growth opportunities and economic and market conditions, which are subject to risks.
And uncertainty and actual results may differ.
Differ materially please see our recent SEC filings earnings release, and financial supplement which are available on our website at investors Dot Chubb dot com for more information on factors that could affect these matters.
We will also refer today to non-GAAP financial measures reconciliations of which to most direct comparable GAAP measures and related details are provided in our earnings press release and financial supplement.
I'd like to introduce our speakers. This morning first we have Evan Greenberg, Chairman and Chief Executive Officer, followed by Peter and our Chief Financial Officer.
Well then 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.
Good morning.
We had an excellent start to the year.
Core operating income was up double digits, driven by all three sources of income.
P&C underwriting income was up over 15% with a published combined ratio of 86.
Net income was up more than 23%.
And life insurance income was up almost 10%.
We produced double digit premium revenue growth from across the globe with strong results in our commercial and consumer P&C and international life businesses.
Core operating income was up over 20% to $2 2 billion and operating EPS was up nearly 23% $5 41.
As you saw our earnings and EPS benefited modestly from two one time items that partially offset each other to.
Adjusting for these <unk>.
Up 18, 6% and nearly 21% $5 33.
Again, our P&C underwriting income was up over 15% to $1 4 billion.
Driven by stronger and premium growth and great underwriting margins.
The ex cat current accident year combined ratio was 83, 7%.
On the investment side adjusted net investment income of nearly one 5 billion was up 23 and a half.
We now have more than $140 billion in invested assets up over 19% the last two years.
Our fixed income portfolio yield is four 9% versus $4 four a year ago.
Our reinvestment rate is currently averaging six 1%.
Our liquidity is very strong and investment income will continue to grow well as we reinvest cash flows at higher rates.
Life segment income of $268 million was up nine 8%.
Our annualized core operating ROE was 13, seven with a return on tangible equity of nearly 22%.
Peter will have some more to say about financial items.
Turning to growth pricing on the rate environment.
Solid net premiums for the company increased over 14%.
For global P&C, which excludes agriculture net premiums increased $13 three in the quarter with commercial up over 11.
<unk> were up over 19.
P&C premium growth in the quarter again was balanced and broad based globally.
<unk> areas of the globe and commercial versus consumer, reflecting favorable underwriting and market conditions overall.
Life insurance premiums and deposits were up over 39% driven by our business in Asia.
Came from a number of countries and distribution channels.
<unk> contributed $2 nine and 26 percentage points, respectively to the global P&C and.
In life growth results.
In terms of the commercial P&C rate environment overall conditions were quite favorable in both property and casualty and.
And price increases exceeded loss cost while rate decreases in financial lines slowed some.
So starting with North America.
Premiums, excluding agriculture, we're up over 10% and consisted of 12, 3% growth in personal insurance and about 95% growth in commercial pm.
PMT lines up 13% and financial lines down about 7%.
If we adjust the P&C growth.
Net impact from two items in the major accounts division.
PMC lines normalized growth.
Very strong 11 six.
Two items were an unusually large structured transaction, we wrote partially offset by the previously discussed corrective underwriting actions and primary and excess casualty that are continuing and continuing to wind down over the next few quarters Baidu.
By the way that large structured transaction negatively impacted North America commercial's combined ratio by over a half a point.
With the loss ratio impacted by over a point.
Excluding this impact on masks the current accident year combined ratio run rate.
Appointing North America, P&C growth was record new business of over $1 $2 billion.
A very strong renewal retention on a policy count basis of $84 seven.
Both speak to the tone of the market and our excellent operating performance.
Premiums in our major accounts and specialty division increased 12%.
With our large account retail business up 12%.
Our E&S business up about 10%.
Premiums in our middle market Division increased about 7% with P&C lines up 10, six and financial lines down six and a half.
Again, the P&C market environment in North America, overall is quite favorable and rational financial lines aside.
Pricing increased 12, 8%, including rate of nine four and exposure change that acts like rate of three one.
From our very large middle market business to small commercial to personal lines and driven by both property and casualty we saw the best rates in pricing overall that we've seen in the last four to five quarters.
One of the best quarters for large account casualty pricing.
Our North America business rate increases for property and casualty exceeded loss cost trends, let alone pricing, which was even stronger so let me provide a bit more color.
Bill rates and pricing.
Property pricing was up 13% with rates up seven eight and exposure change of four 8%.
Casualty pricing in North America was up $13 one.
With rates up 10, nine and exposure up 2%.
And in workers comp, which includes both primary comp in large account risk management pricing was up 4.8 with rates up 2% and exposure up for page six.
Loss costs in North America are relatively stable and in line with what we contemplate in our loss specs, we are trending loss costs at six 8%.
Short tail classes at five three and long tail, excluding comp seven six.
We're trending our first dollar workers' comp book at four 6%.
For financial lines, the underwriting environment and a number of classes in a word is simply them right.
Rates continue to decline, albeit at a slower pace. We are of course trading growth for underwriting margin and income where we need to in.
In the quarter rates and pricing for North America financial lines in aggregate were down 3% and $2 seven respectively.
We are trending financial lines loss costs of just over 5%.
On the consumer side of North America, our high net worth personal lines business had another outstanding quarter.
<unk> is a powerhouse business.
Over $5 5 billion in premium last year and it grew over 12% in the quarter with new business growth of nearly 35%.
It speaks to a franchise in a class of its own in terms of service and capability.
Premium growth for our true high net worth premier and signature segments.
Group that demands the most underwriting and servicing grew 16, 5%.
And our homeowners business, we achieved pricing of 17% in the quarter, while our selected loss cost trends remain steady Henry.
While a small quarter, our agriculture business had a very good underwriting results.
The 23 crop year forgot a bit better than we projected.
Turning to our international General insurance operations net premiums were up 17, 5%.
16, Chubb and in constant dollars.
Our international commercial business grew 11, 4%.
While our consumer was up over 26.
Growth this quarter was geographically diverse with all major regions, contributing which again illustrates the clue true global nature of the company.
Asia led the way with premiums up 40%.
Excluding <unk> contribution premiums were up seven point seller.
Latin America had a strong quarter with premiums up about 13%, while the continent of Europe grew 10 three.
We continued to achieve positive rate to exposure across our international commercial portfolio.
Retail property and casualty lines pricing up five and a half and financial lines pricing down to three.
Loss cost inflation across our international retail commercial portfolio is trending at five eight.
P&C lines trending six 1% and financial lines trending four eight per share.
Within our international consumer P&C business, our personal lines Division had an exceptional quarter with constant dollar growth of 47% led by Asia and Latin America.
By the way the modest increase in overseas General ex Cat current accident year combined ratio. This quarter was primarily due to the consolidation of our China business.
In our international life insurance business, which is overwhelmingly Asia.
Premiums and deposits were up over 50% in constant dollars with strong contributions from Taiwan, Hong Kong, China and Korea.
Excluding watch high life premiums and deposits were up over 10%.
Depending on the country growth was driven by tight agency brokerage and direct marketing distribution channels.
Lastly, global re had a strong quarter with premium growth of almost 30% and a combined ratio of 76 nine.
We allocate incrementally more cat capacity to our reinsurance business and grew both our card access and risk property portfolios in particular in this quarter.
In summary, we had an excellent quarter and start to the year.
We remain well positioned to continue producing outstanding results through the balance of the year and beyond.
We remain confident in our ability to continue growing operating earnings at a rapid pace through PNC revenue growth and underwriting margins vascular and income and licensing.
And I'm going to turn it over to Peter.
We're going to come back and we're going to take your questions.
Thank you Evan as we've all just heard we continue to build on the momentum of our record 2023 year with strong growth in topline and earnings per share this quarter.
We continue to effectively manage our balance sheet and ended the quarter in a strong financial position, including book value that exceeded $60 billion in cash and invested assets of 143 billion.
Each topping last quarter's all time highs adjusted.
Adjusted operating cash flow was $3 6 billion.
There were two onetime earnings items this quarter that I would like to touch on.
First we recognized an incremental $55 million deferred tax benefit related to the new 2023 from unit corporate income tax law.
This resulted from finalizing our review and two smaller subsidiaries since last quarter, we don't expect additional deferred tax gains related to this law going forward.
Second there was a contribution made to the Chubb Foundation charitable foundation of $30 million pre tax or $24 million. After tax. These items provided a net benefit of <unk> <unk> per share.
Additionally, there were two other noteworthy items in the quarter in March we issued $1 billion of 10 year debt to retire existing debt due to retire I'm sure in May 2024, Lastly, we closed on an additional 9% of shares of what the broader ownership interest at 85, 5%.
This leaves the last tranche of less than 1% of the outstanding what Ishares remaining to close.
During the quarter book and tangible book value per share, excluding OCI increased two 2% and two 9% respectively from December 31.
Driven by strong operating results, partially offset by $350 million in dividends and $316 million in share repurchases in the quarter.
Turning to investments our any rated portfolio produced adjusted net investment income of $1 four 8 billion slightly beating our guidance of $1 45.
We expect our adjusted net investment income to have a run rate of approximately one 5 million to 152 billion next quarter and to go up from there.
Turning to underwriting results the quarter included pre tax catastrophe losses of $435 million, which is modestly lower relative to prior year and is principally from winter storms and other weather related events in the U S.
Prior period development in the quarter and our active companies was a positive $216 million pretax with favorable development of $311 million in short tail lines, primarily from property and credit related lines and $95 million of unfavorable development in long tail lines, which was primarily from excess casualty.
And was within our range of expectations, our corporate run off portfolio had unfavorable development of $9 million pre tax.
Our paid to incurred ratio for the quarter was 84%.
Our reported core effective tax rate was 15, 2% or 17, 3% for the quarter, excluding the update to our room unit tax benefit.
As I've said before our first quarter tax rate also tends to be the lowest of the year due to certain tax benefits associated with equity award vesting and stock option exercises. We continue to expect our annual core operating effective tax rate for the full year to be in the range of $18 75 to $19 two 5%.
I'll now turn the call back over to Karen.
At this point, we're happy to take your questions.
At this time I would like to remind everyone in order to ask a question Star then the number one on your telephone keypad.
Your first question comes from the line of David Maura Madden with Evercore ISI.
Please go ahead.
Hey, good morning.
First question, Evan just wanted to maybe get a little bit more detail on the <unk>.
And $95 million of <unk>.
Speaker Change: Unfavorable reserve development on the long tail lines that you guys took.
This quarter.
And then maybe just unpack that a little bit more would.
Speaker Change: It would be helpful.
Yes, good morning.
Look.
We recognized over $200 million.
Reserve releases so.
Respective.
That included adverse development of.
95 <unk>.
In North America.
Commercial lines.
It was not concentrated in any one period it was spread out from 16 forward.
It was predominantly large cowen excess casualty.
<unk> related in areas, we've discussed trucking logistics companies.
Companies with large commercial fleets.
And it's the business, we have been addressing in terms of rate and underwriting actions in that case I think retentions.
And our loss picks that reflect our action.
In fact.
When we talk about that.
Yes, we had this large LPT those.
Larger than usual and then we.
Offset to a degree by the underwriting actions.
That we've been taking.
You heard it all last quarter and it will run.
Two or more maybe two more quarters.
That's all related back to the same business as you know so there is the mental model. The development was not a surprise because we continually track.
Speaker Change: Actual versus expected activity.
For all product lines.
And we had continued to observe higher than expected loss activity for this business. So we study it more deeply this quarter.
We took as we always well we took we took the bad news.
Speaker Change: We are slow to recognize good news.
No different than I said last quarter.
Our reserves are really strong.
Got it that's helpful and then I did notice that the commercial casualty.
Net premium written growth.
Accelerated during the quarter and you mentioned.
You also mentioned.
The rate increases accelerated a little bit in the quarter as well in commercial casualty could you just talk about how youre thinking about balancing all the elevated uncertainty in the environment with leaning into growth, which it seems like you guys are doing a little bit.
While the growth.
It wasn't a little bit it was it was it was.
It was a step change in in the right way.
The rate, we got exceeded loss cost let alone.
Pricing.
It includes exposure change.
And.
Speaker Change: Got it.
Is what contributed substantially to the.
So the growth.
We grew exposure as well.
Particularly in our middle market.
Long tail business.
Though there was some growth.
Particular lines.
In large accounts as well.
The pricing.
Vast majority of our book.
Is adequately priced in casualty and were getting right.
Okay.
Recognize as loss cost trend and so we maintain the adequacy.
And then the stress classes.
Speaker Change: Which need rate to hit our target combined ratios, that's where rate.
ICF has accelerated in the market.
<unk>.
Because the market is also reacting we're able to achieve.
And grow the business to a degree.
Otherwise, we get some rate.
Great business.
And there are one or two classes, where that's occurring.
That's helpful. Thanks for the detail.
Hey, guys.
Your next question comes from the line of Mike Zaremski.
With BMO capital markets.
Please go ahead.
Hey, Thanks, Scott good morning.
Now on the topic of of social inflation I think.
I'm, assuming when we think about social inflation that the main way to tackle it as this risk selection and pricing et cetera.
I recall in your shareholder letter you talked about.
Working.
Speaker Change: Or maybe you can elaborate you and others have talked about kind of it sounds like a more concerted effort to.
To lobby efforts are to maybe.
State by state.
See if there could be some reforms. So just curious if you could elaborate if there is anything changing there in terms of the Chubb, where the industry is doing to to maybe caplets on the backend or.
Thanks.
Yes.
First of all.
Our loss picks reflect the reality of the environment right now.
Speaker Change: Got it.
The inflation we observe.
And.
That excludes any actions as we know them to be.
It might ameliorate it around tort reform.
Our reform is.
Going to be a long term never ending process.
Thanks.
You say, it's all going to be federal state by state.
The county by County.
Speaker Change: Depending.
And it depends on the.
Classes business as to the cause.
And to reform.
Thats required to bend the curve to the loss cost.
The insurance industry can support.
Tort reform and thus.
The insurance industry, and particularly leader.
We don't have the printing press.
<unk>.
This is ultimately paid for by corporate America on it.
It's paid for by consumers buy the products and the services from Courtney Corporate America syntax on everybody.
If you look at it in a clear eyed way.
We reflect the inflation that we see whether it comes from.
<unk>.
Social inflation, so called social inflation.
Or other causes.
The prices and the rates, we ultimately charge.
Speaker Change: Corporate America to the business.
Tort reform.
Comes in there.
<unk>.
Litigation Finance, where disclosure laws after changed around that.
And I mentioned that Thunder.
Some states require rates most stone.
It's very simple because it puts in context how sympathetic.
Plaintiff.
And what are the motives.
There's laws around.
Bears.
Liability the responsibility, but they called joint and several.
Speaker Change: Laws around you.
You could be 1% liable, but youre the only one with any money so.
So they make you a 100% responsible financially.
There are reasons that that occurs.
<unk>.
That is also being gamed.
By the trial bar.
Speaker Change: And how they target cases.
And how they target companies, it's those sorts of things under the insurance industry is hardly sympathetic.
Speaker Change: Corporate America needs to do more in this case and we are all active in a number of companies are active.
In advocating for reforms, but it's not a magic.
Silver Magic bullet.
To take many years and.
Speaker Change: Sure require more effort.
That is currently being expanded.
Alright, great.
Switching gears, maybe a quicker question on on personal lines, if I, if I look at kind of.
What Chubb is set about kind of loss cost inflation in personal lines and appreciating you have.
Different books, and the and then I guess the average of your peers that you've got you you all have been talking about kind of close to double digit or double digit loss cost inflation for many years now it feels like that's been.
Some of your peers have caught up to you in terms of I think they were underestimating it but just curious if you can provide any context is is the loss cost inflation more so coming from from weather inflation or is it does it is it just as much coming from wage inflation or just any context.
Speaker Change: Unpacking that kind of 10 to 10, 5% loss inflation. Thanks.
Yeah.
It comes from three sources.
A couple of sources it comes from.
Frequency of loss and from various perils.
Speaker Change: It comes from and so there you could think weather related.
Speaker Change: Thanks.
Speaker Change: Water related.
So the infrastructure impact.
Speaker Change: Housing stock itself.
Speaker Change: It comes from wage inflation and.
And it comes from materials.
Speaker Change: Which remember we insure.
Not the average homeowner we're sure we're insuring.
Those who are more affluent.
And our product is a richer product in terms of how it responds to loss.
Speaker Change: The position it places you back in following loss, we try to duplicate exactly what you had before the loss.
What sort of like it but.
Speaker Change: Duplicated.
Speaker Change: That has an inherent inflation.
As well.
<unk>.
Speaker Change: And we ensure more complex properties and we ensure more complex and expensive content.
So that may contribute to a degree to a greater amount of inflation that you might see generally.
Across but.
Speaker Change: We stay on top of it.
And we have.
Speaker Change: We've stayed on top of it in terms of both pricing and the amount of coverage, we give to our clients. So they don't fall behind.
Which for all our homeowners.
Speaker Change: George that shows up yes, and your bill that you get it once a year from us.
Me included.
Okay.
Speaker Change: The next question comes from the line of Gregory.
Gregory Peters with Raymond James.
Please go ahead.
Well good morning, everyone.
So thanks for all your comments when I was looking through your results.
I was particularly.
Struck by the growth in the reinsurance lines.
It seems to have accelerated.
And I'm just curious if there is a change in your perspective regarding leading into those market conditions.
Speaker Change: Yes.
<unk>.
Greg keep in mind percentages or a funny thing.
It's not a big.
Business, it's not a big book of business, we're not a large reinsurer.
So the percentage growth.
Which is very good to see.
Speaker Change: Is off of a relatively small base so in dollar terms.
<unk>.
It's nice thank you very much or global re colleagues, but it's not.
Speaker Change: A large amount.
We allocated.
Given the.
Reising environment and given the structure.
And given underlying pricing and structure of seasons portfolios.
Incrementally as I said in the opening more cat capacity.
With two global re which means they are writing a bit more card access.
Bit more.
Property proportional.
And access per risk.
And.
Speaker Change: And it's it's.
It's across the globe, where they see favorable conditions.
That's predominantly with Jefferies.
Speaker Change: Okay fair enough.
I know.
Got it.
Preview. This question, knowing that I'm, probably not going to get a great answer, but I feel like it's appropriate to ask.
Anyway, and Youll get a lousy answer guys.
Speaker Change: Well.
Speaker Change: The topic is M&A I mean, you featured it you talked about.
The one to two points of drag you get on holding excess capital you had mentioned that in your shareholder letter.
You're generating great results.
I feel like.
This is a time, where we could see you get more active in the market, but maybe.
Speaker Change: Maybe you can just talk to us broadly about.
What you're seeing in the market is there a pipeline out there or is it is it.
Is it.
Is there a lot of opportunities or give you.
Some perspective if possible.
Okay.
Speaker Change: Greg.
Speaker Change: Amit rest.
Speaker Change: [laughter].
And.
The results are terrific.
We have excess capital for both risk and opportunity.
It's earning.
Putting money to work at over 6% right now.
If you put the capital against our invested asset requires asserting our damn good Roe.
The cash that we hold is accretive to shareholder returns.
Hum.
And you know look were.
We're a global company with a lot of global opportunity.
And our eyes are always open.
Speaker Change: But as I said Amit routes.
Don't hold your breath.
Okay I had to give it a shot.
Thanks, guys.
Okay.
Okay.
Your next question comes from the line of Ryan.
With autonomous.
Please go ahead.
Hey, Thanks, good morning.
I guess first question just on financial lines.
Yeah.
I think you said that it's quite frankly don't know, that's obviously, a pretty broad set of various lines within financials.
<unk>.
I think I heard you say that youre shrinking in mid market two had been my perception of that.
It was a little bit more disciplined than some of the major accounts now so I'm just curious if you could just take us women.
Speaker Change: Financial lines, whether it's account size or.
<unk> access.
Whatever.
Sure.
Okay.
There are folks acting more or less irrationally.
Yeah.
Yeah.
Look.
<unk>.
The.
The way to think about the don't just income.
It behaves differently.
To a degree and major account than it does in the middle market.
The cohorts that show up where.
Market.
Competition.
I'm not going to unpack each one of those.
But what I'll, what I'll break down for you as for us.
Do you have.
Publicly traded.
Donna.
And.
Whether it's in middle market or it's in large account.
There is dumb behavior, depending on the cohort I'm not going to unpack, which one of them. It has that much transparency, but you see it.
In large account and you see it.
<unk> publicly traded deal.
Speaker Change: There is not for profit DNO.
We write it in both major accounts and we write it in middle market.
And by the way we write it in E&S.
And.
There are cohorts where market we know.
Because we are the largest writers of this business. We know what the experience is what the real exposures are where losses are coming from.
Market and pockets of that important pockets irrational dong.
Employment practices liability.
Again, I'm going to say, which cohorts.
Speaker Change: Our very naive.
I don't understand the trends and the exposures that are driving EPL lie.
Speaker Change: And where its being driven what states.
We're of law has changed is it is it around its not simply wage and hour now technology impacts.
Speaker Change: There are those who have no idea, what's catching up to them.
Speaker Change: <unk>.
And then you have.
Legal changes that are occurring at the federal level.
Are impacting.
<unk>.
And.
This is a big company, we got a lot of opportunity and a lot of places.
And in some of those areas.
We're just not going to follow people off the cliff it doesn't matter.
Got you.
Speaker Change: Follow up just.
And shifting gears, just curious about priorities in U S personal lines.
Felt like you had the stuff in California, a few years ago that in the past few years, it's sort of been more of a business, where you've been focused more on risk selection and growth for good reason, but.
I mean, it looks like it's more than $1 billion of underwriting earnings today, it looks well underwritten.
Maybe if you could update us on.
Yes, like what are the key sets of priorities.
In terms of managing that business right now.
Well T sensor priorities.
Good question.
On one hand.
We can continue pushing the envelope.
And we're in patient.
Speaker Change: On the <unk>, how we define the services.
And coverages for the customer.
In our space or do we expect from a great carrier.
The kind of resiliency services and engineering services.
The kinds of technology.
We can use to interface with our customers you can look better experience.
How we can use technology and claims and manage a better and more seamless outcome for them.
All of that is.
Wrapped up and how we think about that part.
The business our clients are cat exposed.
We're in a world where.
Where they choose to live where they live.
No we can make the choice to live where theyre more cat exposed they will share more risk with us we can help them manage that risk and the portion that they share and as well reduce the exposure to loss on the portion of <unk> Bank.
It also is allowing us as we're doing that both through admitted and non admitted to in a sense manufacture.
More cat capacity, which is.
Really part of the ability or fuel to take on more exposure, we have a finite balance sheet, we can't take infinite risk.
So we think about it in that regard.
Our pricing.
And the rate.
Against exposure.
From pearls continues to improve we can keep pushing the envelope.
How granular we become in terms of.
Our risk rating more cohorts of risk.
To apply right.
And price against.
And we're continuing to do that but we're rustless about that we can be even better at it.
That allows us to provide more coverage in areas think about it like flood, where we have areas where were actually leaning in to offer more protection to clients, but be able to manage the portfolio.
Your next question comes from the line of Brian Meredith with UBS.
Yes go ahead.
Thank you I appreciate it.
Curious and I'm sure. There's some moving parts here, but can you help me kind of square in North America commercial and I'm looking at gross written premium was up a little over 2% and then Youre nets up nine 5% and exceed your ceded premiums kind of continue to drop the last couple of quarters is there something going on there is it.
Technical or you're buying less reinsurance what's going on.
Yes.
John Lupica: I'm going to let John Lupica.
Give the stats really come at it came this quarter from two things that are not LPT.
<unk> had a heightened impact on it distorted the gross in that yes.
Yes, Brian noted, we had and that large structured transaction. This quarter that produced net written premiums with no gross written premiums.
In addition, we had we had exited two large energy age of fronted programs and historically a lot of growth with very little net when you adjust for those three items the gross and net are virtually identical.
That's really interesting.
On the net to gross ratio, it's really transactional.
Equity.
Not fundamental.
Got you and no change in reinsurance buying habits makes sense.
John Lupica: I just see.
Okay excellent and then Evan I may have missed this but can you provide a lot of great kind of pricing rate trying to expose your commentary, but did you did you give us what the kind of total North America commercial pricing call it rate and trend was and if not can we get that you typically provided it.
I did give it to you.
Are you asking me to go back and do it again.
Okay.
How do you actually want me to look at it.
I'll give it to you if you want me to take up my notes and do it or picture for Ford.
Sure.
[laughter] listen North America, I said pricing increased 12.8.
Including in P&C, including rate of 9% and exposure change of three one.
Gotcha.
And that.
Trend loss cost.
John Lupica: So we're trending short tail at six eight.
John Lupica: And long tail.
Sorry, overall loss cost six eight short tail five three long tail seven six.
Great.
Appreciate it.
John Lupica: Dave.
It was like homeowners.
Yes.
The next question comes from the line of Bob <unk> with Morgan Stanley. Please.
Please go ahead.
Bob: Yes, good morning.
Hopefully I'm not asking anyone to repeat anything but just a quick question on the on your annual shareholder letter writing you talked about the willingness to pull back on unprofitable lines.
It demonstrates sound underwriting discipline.
But just kind of really curious as to how to square away.
That line of thinking with your first quarter results because it seems like the first quarter results continue to demonstrate a lot of strength a lot of growth in the financial lines somewhere you're looking at as a pay as John Leslie.
<unk>.
Did you see that so im going to interrupt you.
Are you really.
Speaker Change: Financial lines.
Frank.
Number one number two.
I said right upfront.
In major accounts.
In certain areas of casualty, where we're taking action.
And we saw it last quarter, so it this quarter and it impacts growth.
And then there are other areas growing those are two that are visible.
Oh, okay.
Either way by the way look at our 20 year track record over any period of time, where we have shrunk or business cut businesses and half over periods of time, when we couldnt earn an underwriting profit and then tripled them after that.
Do you have another question for me.
[laughter].
No I think that's helped very helpful. Yes. It helped me contextualize. Thanks. Thank you.
Youre welcome.
Your next question comes from the line of Robert <unk> with Goldman Sachs. Please.
Please go ahead.
Robert: So chubb produced 86% combined ratio, which has continued to improve and net.
Robert: Net investment income contribution to ROE have gone up.
I know theres more bifurcation than ever with respect to pricing activity by line of business, but I'm curious when do you think the market will sort of dictate the matching of rate and loss trend versus the excess margin you're generating now.
I'm not sure I understand your question.
Sorry.
So when you're serious.
Yeah, I'm just I'm just curious when you think basically rate rate and loss trend will be.
At similar levels versus rate exceeding loss trend.
Yeah.
I have no idea it depends on when the market.
And I don't know, we'll never really happened but.
So you are executing at a very in a very theoretical way.
Through something need and what is a market. So it's always it's always inherently messy.
But.
When.
Typically.
Win rate.
And price are adequate.
For in excess of what's required to earn a reasonable return.
That is the market in time notices and respond.
And at that time right.
And on price.
Ste.
Robert: Steady with loss costs.
And the market.
Begins to go soft.
We're not part of the cycle happens.
Means right.
On price.
Less than loss cost.
And that is not terrible until right on price.
Versus loss cost is not.
Not enough to achieve a reasonable return.
On capital.
Speaker Change: Thanks for that color and maybe just a follow up on that.
I'm curious if you think that.
Data and analytics.
These cycles are becoming less volatile over time.
Oh and some areas, yes, some areas are absolutely not because the loss cost environment, which.
Okay.
It is not less volatile.
When breaking.
The loss cost environment as Morris specific.
E loss cost inflation.
Then with data and analytics and steady periods like that then the amplitude of cycles is different.
Thanks really helpful.
Yeah.
Your next question comes from the line of Jimmy <unk> Lar.
With J P. Morgan.
Please go ahead.
Good morning, So I had a question on just your comments on them behavior in financial lines. I was wondering if you could talk about who it is that you're seeing are being undisciplined.
Is it companies that are established that the large players in the market or.
The smaller competitors new money that's come in just some color on who is driving because it's been going on for Laurence.
Next question for me.
Now gonna Goldman door, it so and then on.
On casualty reserves.
There's been a lot of the talk about.
Both to go Oh pre COVID-19 near starting to emerge negatively in a few companies have seen post COVID-19.
Adverse development as well so any comments you can make on your view of casualty reserves overall for the industry and for your own book.
You know we.
We did expect.
<unk> of loss cost hotter.
Frequency in particular.
And we have talked about it during COVID-19.
Right.
We didn't take the head fakes.
That loss costs during shutdown, obviously courts are closed frequency.
Walnuts.
Yes.
Speaker Change: Severity.
And at that time, we maintained our view we saw right through it and said you know trends aren't changing so we continue to trend. It's just a question of repair.
Reporting.
And what period does it get reported.
So we expected that.
The trend doesn't change, but the reporting pattern changes.
Therefore, if you really want to look at it in a correct way each site.
Speaker Change: Yes.
Went down during COVID-19 to Reaccelerate after COVID-19.
And then the coat the expected cohorts of claims and.
In aggregate still appear.
And that's what we've seen.
The pattern post COVID-19.
Not out of line with our expectations and our pricing and loss specs.
Okay.
And just repeat or what are you what's the dealer.
Do you expect to change in your tax rate next year given whats the.
Speaker Change: The changes in Bermuda and to the extent you can quantify the expected tax.
For next year and after it is too early to say there is too many moving parts in terms of how the different countries are going to adopt and.
We're looking at it closely but it's just too early to say.
Thank you.
You're welcome.
Your next question comes from the line of Cave Montazeri.
With Deutsche Bank.
Go ahead.
Good morning.
There's nothing called out this quarter with regards to the Baltimore greater losses.
Appreciate it's early days, but is there any color you were sharing with us on this topic.
No.
Our policy is we do not report on individual claims.
I've noticed a lot of commentary on this.
<unk>.
No.
Look.
I would say.
It's a tragedy.
Speaker Change: And.
Okay.
An accident.
<unk>.
It's done a lot of damage.
However.
When it comes to chalk it's a.
Another large loss there is nothing.
Yeah of course, we have exposure, but the exposure is within what we would contemplate.
And Theres, nothing outsized to us and so.
Alright.
Another large unfortunate claim that's all there is to it.
Your next question comes from the line of Elyse Greenspan with Wells Fargo.
Please go ahead.
Hi, Thanks. Good morning, My first question, Evan I was hoping on.
You could just provide some more color on what drove the sequential acceleration in exposure growth that you pointed to within property casualty as well as within workers comp.
Well.
What I said to release thank you.
The premium growth.
We don't really disclose exposure, but the premium growth.
Came from.
A substantial portion of it came from rate.
And price, which were very healthy.
Across the portfolio property group.
Speaker Change: Property was our biggest growth area.
Speaker Change: Casualty grew.
Particularly in our middle market area.
And in E&S.
Speaker Change: And.
Right and price.
How does substantial contribution to the growth.
Speaker Change: Though we also grew new business where pricing.
Versus loss cost.
<unk> to us.
Thanks, and then.
My follow up you.
You highlighted some planned we underwriting within North America commercial I believe you would also told us about that last quarter and it sounds like we'll have that works through for the next couple of quarters. So is the right way to think about I guess the growth in North America commercial ex the LPT and yes.
We underwriting is kind of the baseline of growth for the year.
I know you don't like to guide, but you seem pretty positive about casualty pricing and things like that just trying to pull it all together.
I'm not going to help you with your worksheet I'm, sorry at least I.
I don't guide, we don't guide growth for the year.
What we did tell you is excluding the LPT.
Excluding the unusual size of the LPT, because we have lpt's virtually every quarter, but excluding the.
The unusual size of it.
<unk>.
The.
The unusual one time underwriting action.
Speaker Change: In large accounts.
Speaker Change:
That I described.
Net of that we gave you will growth rate and we said that's the underlying growth rate for the quarter.
That is not.
Speaker Change: We didn't say that's a run rate for the year. This is this.
Speaker Change: This is a diversified commercial and personal property casualty book of business.
We are hardly we don't give guidance on growth for the year.
Got it thank you.
Youre welcome.
I will now turn the call back over to Karen Beyer for closing remarks. Please go ahead.
Thanks, everyone for joining us today, if you have any follow up questions, we'll be around to take you Paul enjoys.
Enjoy the day thank you.
Ladies and gentlemen that concludes today's call. Thank you all for joining and you may now disconnect your lines.
Please wait the conference will begin shortly.
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