Q2 2025 Chubb Ltd Earnings Call
Thank you for standing by. My name is Greg and I will be your conference operator today.
At this time, I would like to welcome everyone. To today's Chubb, limited second quarter 2025 earnings call all lines have been placed on mute to prevent any background noise.
After the speakers remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. And if you'd like to withdraw your question, simply press star 1 again, thank you.
Speaker Change: I would now like to turn the call over to Karen Byer, senior vice president of investor relations Karen. You have the floor.
Karen Byer: Thank you and Welcome to our June 30th 2025 second 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 future.
Karen Byer: And actual results may be.
Karen Byer: Please see our recent SEC, filings earnings release and financial supplements which are available on our website at investors.gov, for more information on factors that can affect these matters.
Karen Byer: We will also refer today, to non-gaap financial measures, reconciliations of which to the most direct comparable, gaap measures and related details or provided in our earnings press release and financial supplement.
Karen Byer: Now, I'd like to introduce our speakers first. We have Evan Greenberg chairman and chief executive officer
Peter ants: Followed by Peter ants, our finance Chief Financial Officer.
Karen Byer: And then we'll take your questions.
Evans: Also, with us to assist with your question, questions are several members of our management team and now it's my pleasure to turn the call over to Evans.
Evans: Good morning.
Evans: As you saw from the numbers, we had an excellent order.
Core operating EPS was a record. 6.14 cents. Oh, 14% from a year ago.
Evans: Supported by record underwriting, strong investment results, in good, premium Revenue growth.
Evans: all of our businesses in regions of the world, contributed to the quarter's growth, particularly in North America, our Middle Market and small commercial
Personal lives and ens businesses.
Evans: Consumer PNC in all regions.
Evans: And life insurance in Asia in the US.
Evans: Core, operating income of 2 and a half billion, was a record result up, 13%.
Evans: The results demonstrate the broad-based Diversified nature of our company geographically.
By customer segment and product area.
Evans: Our balance of business and presence provides us a wide range of opportunities, which supports long-term sustainable and profitable growth.
Evans: In the quarter, we produce record underwriting income on both the published and current accident year xcat basis.
Evans: Supported by premium growth and underwriting margin Improvement.
Evans: Published underwriting income of 1.6 billion was up, 15% from a year ago, leading to a combined ratio of 85.6 more than a percentage Point better than a year earlier.
Evans: Current acts in a year underwriting income. Excluding cats was up almost 11 and a half percent.
Evans: Supported by a combined ratio of 82.3, again, nearly a full coin improvement from prior year.
Evans: On the invested asset side to the quarter adjusted. Net investment income. Was nearly 1.7 billion up 8%.
Evans: Our fixed income portfolio, yield is 5.1 and our current new money rate is averaging 5.4%.
All right. Operating cash flow in the quarter which supports Investments.
Evans: Quite strong 3.2 billion.
Evans: Given Federal deficits a weakening dollar and our country's trade policies. I expect the trend is towards higher inflation and a steeper yield curve.
Evans: Which is an issue for our country, but will support our companies continued growth in investment income.
Evans: Tangible Book. Value growth are primary measure of wealth. Creation was up 23.7% per share from a year ago and 8% from the previous quarter.
Our annualized core operating return on tangible equity in the quarter.
Evans: With 21%, very strong result.
Evans: Peter will have more to say about financial items.
Evans: Turning to growth pricing and the rate environment.
Evans: Global PNC premiums, which exclude agriculture group 5.8% and 6.4 in constant dollars with commercial up 4.2 and consumer up 11.9.
Evans: Premiums in our life. Insurance division grew, almost 17.5%
In terms of the US commercial PNC, underwriting environment, large account related, short-tail business, both admitted and ens has grown quite competitive, a lot more. Capital is chasing the property business and prices are softening.
Evans: While terms and conditions remain steady.
Evans: We are of course disciplined and we're not going to write business below inadequate price.
Evans: While others are leaning in. We've begun, walking away where necessary
Evans: On the other hand, Middle Market and small commercial property. Remain much more disciplined, and orderly rates continue to rise and we're growing property in this area.
Casualty continues to firm in all areas that require rates retail and DNS, both large count Middle Market. And again, we are growing
While Financial lines, remain soft. We're seeing signs of firming and discreet classes.
Evans: That is backdrop. I'll give you some more color by division.
Evans: Beginning with North America, PNC, premiums excluding agriculture up, 5.3, including growth of 91 and personal insurance, and 4.1 in commercial.
Evans: PNC lines up, 42 and financial lines, actually up 3.6.
In commercial, we had a good quarter for new business up 7% versus prior year.
Evans: Driven by Middle Market across the board and in large account Neons casualty lines.
Evans: Our renewal retention on a policy count based.
Evans: Was 86%.
Evans: Result with PNC up, 10% and financial lines up 2%.
Evans: Our small Commercial Business, grew about 10%.
Evans: Premiums in our major accounts and Specialty, division, grew 1 and a half percent.
Evans: With our large account business, essentially flat and our ens business up. 5.6% both were heavily impacted by premium reductions in property.
Evans: Overall commercial pricing for Property and Casualty excluding Financial lines, and comp was up 4 and a half percent with rates up, 1.6 and exposure change of 2.9.
Evans: Property pricing was down to 1.5% with rates down about 7, offset by exposure. Change of 4.9 importantly, going the stuff further property pricing was down more than 12% in large account business.
Evans: Both emitted in the NS and it was up over 8% in Middle Market and small commercial.
Evans: Casualty pricing in North America was up 11.6.
Evans: With rates of 10.6 and exposure of 0.9.
Evans: Financial lines pricing was down 1.2%, and the workers comp primary comp pricing was essentially flat.
Evans: While large account, risk management pricing was up over 7 and a half.
Evans: In North America commercial are selected loss cost, Trends remain steady.
Evans: Across the board. No change from what I gave you last quarter.
Evans: on the consumer side of North America,
Evans: our highet worth personalized, business had a simply outstanding quarter with premium growth exceeding 9%,
New business growth was more than 17%.
Evans: Homeowners pricing was up, 102 in the quarter and the head of loss costs, which remains steady at 8.9%. I expect the kinds of results we're showing in personal lines to endure and continue.
Evans: Turning to our International General Insurance operations.
Premiums were up 8 and a half percent or over 10% in constant dollar.
Evans: Commercial lines. Grew about 7% and consumer was up more than 15.
Evans: From a region of the world perspective, Asia grew over 12 and a half percent in constant dollar Europe. Grew over 8 and Latin America grew over 17%.
Evans: Premiums in our London, wholesale business were up over 7%.
Evans: And our International retail Commercial Business. PNC pricing was up just a half a percent. And financial lines pricing was down over 6 and a half the loss cost Trend and our International retail business remains steady
like in North America, large account, commercial property, shared and layered has become much more competitive, particularly in London while in the rest of the world property is growing. More competitive conditions. Remain reasonably orderly though. They vary by market
Evans: in our International life insurance business which is fundamentally Asia, premiums were up, 18% in constant dollar and in North America, combined insurance companies premiums grew over 17.
Evans: Our life division, produced 305 million of pre-tax income in the quarter up about 10 and a half percent.
Evans: As you know, the economic and geopolitical environment is dynamic and evolving.
Evans: We're in a period of Greater uncertainty.
Evans: The US recently passed tax legislation and efforts towards these regulation.
Evans: Should support economic growth.
On the other hand budget deficits, trade and immigration policies, and a weaker dollar of potential headwinds that can impact both economic growth and inflation.
Evans: The picture is complex.
Evans: If that is context chubs fundamentals and our positioning or simply excellent.
Organizationally. We're performing at a high level, coupled with our broad-based Global diversification and a disciplined energized and talented culture of professionals.
Evans: so I observed at the beginning of the year,
roughly 80% of our businesses have good growth and continued growth prospects.
Evans: Ability to continue to grow, both top and bottom line at a superior rate, hats and FX not withstanding.
Evans: To reinforce from all I can see overall.
Evans: I expect the company's pattern of growth revenue and earnings to continue. Now, I'll turn the call over to Peter and then we're going to come back and we're going to take some of your questions.
Good morning. As you've heard from Evan, we had another strong quarter that contributed to quarterly and 6-month records.
Speaker Change: Our results were supported by exceptional balance sheet strength, including all-time highs and Book, value of 69 billion, and cash and invested assets of 160 billion.
Speaker Change: Additionally, the quarter produced the adjusted operating cash flow of 3.2 billion.
There are a few Capital related matters, I'd like to touch on.
Speaker Change: In May our board authorized a new 5 billion re-share repurchase program that took effect on July 1st with no expiration date in the quarter. We returned 1.1 billion of capital to shareholders, including 388 million in dividends and 676 million in share repurchases.
Speaker Change: Book in tangible book, value per share, grew 6.1% and 8% respectively for the quarter.
Speaker Change: Look in tangible book, value per share, excluding aoci grew 3.4 and 4.5 respectively for the quarter and 10.3 and 15.3 respectively from the prior year.
Speaker Change: This quarter, we also closed on the acquisition of Liberty mutual's PNC business in Thailand, which deluded tangible Book value by about 230 million or about half of a percentage point to growth.
Speaker Change: Our core operating return on tangible equity and core. Operating, Roe were 21% and 13.9% respectively for the quarter.
Speaker Change: Pre-tax catastrophe. Losses were 630 million for the quarter. Split 60% us and 40% International from a variety of events.
Pre-tax prior period development in the quarter. Interactive company was favorable 319 million.
Speaker Change: Split 87%, short, tail, primarily commercial property, related lines, and personal Auto and 13% long tail.
Speaker Change: Our corporate runoff portfolio had adverse development of 70 million mostly from molestation related claims development.
Speaker Change: Turning to Investments our a-rated portfolio increased over 6 billion. This quarter reflecting strong operating cash flow as well as positive marks to Market and favorable FX partially offset by shareholder distributions.
Speaker Change: Adjusted, net investment income, what's 1.69 billion. And we now expect adjusted, net. Investment income to be approximately 1.72, to 1.74 billion, next quarter.
Speaker Change: Our core effective tax rate was within our previously, guided range, and 19.1% for the quarter. And we continue to expect our annual core, operating effective tax rate to be in the range of 19 to 19.5%. I'll now turn the call back over to care.
Thank you, Annette. At this point, we're happy to take your questions.
Speaker Change: Thanks, Karen. And at this time, I would like to remind everyone in order to ask a question, simply press star and the number 1 on your telephone keypad. Once again, star 1 and we will pause just a moment to compile the Q&A roster.
Speaker Change: And it looks like our first question today comes from the line of Gregory Peters with Raymond James Gregg. Please go ahead.
Good morning, everyone.
Speaker Change: Um, so, uh, during the quarter, um, uh, Evan, you and John, um, put an article, uh, an editorial in the Wall Street Journal about the litigation, uh, challenges that, um, the industry faces and and and I so I wanted to just, um, have you talked a little bit more about this?
Speaker Change: Specifically, how is it affecting? Um the coverage is for for casualty in general liability. Um is is it making it uninsurable? Um and and I guess how do you see the tort reform?
Speaker Change: Uh situation playing out because getting some sort of federal resolution seems to be challenging to say the least and and a state-by-state strategy for reform. Seems like you could take forever
Speaker Change: Yeah. So
Speaker Change: You know.
Speaker Change: You got to separate 2 things. Um,
Speaker Change: So, let's not conflate.
Speaker Change: Um,
Speaker Change: The 2 of us wrote that article.
Speaker Change: um,
Speaker Change: Pop back.
Speaker Change: Um, that was about public policy.
um, and that was
Speaker Change: An issue that people should be focused on for our country.
Speaker Change: That is is a problem.
Speaker Change: It impacts.
The cost of everything.
It's inflationary.
Speaker Change: It impacts Innovation and growth of business.
Speaker Change: Continuity of businesses.
Speaker Change: Um, litigation
Speaker Change: and the
Speaker Change: movement of
costs.
Speaker Change: Inflation around.
Which runs?
Speaker Change: The 7 to 9% every year which is a mult.
Of what the nation runs is inflation.
Speaker Change: Is.
Speaker Change: Um, roughly the total cost is roughly 2 and a half percent of GDP.
Speaker Change: And only a fraction of the 550 billion goes to the actual aggrieved party.
Speaker Change: And while litigation is an important function in a, in a society, based around laws, um, The Trial Bar and the litigation funding industry. Together, are money-making Ventures that are out of control.
Speaker Change: And we are pointing that out because I started by saying, don't conflate 2 things because the insurance industry and our job. We don't print money. We intermediate money.
and frankly, when I look from an insurance Point of View today,
The pricing for most liable.
Speaker Change: Did I lose you?
Speaker Change: Operator, I can't hear the speaker.
Speaker Change: Yes, you are on.
Evan Greenberg: Was Evan. I I missed the answer. Um, can you still hear me?
Speaker Change: Hi, you are back.
Evan Greenberg: Can you guys hear me?
Speaker Change: Yes.
Speaker Change: Yes, like loud and clear. You're
I, I dialed back out as soon as your line dropped, so, please continue.
Correct, you are.
Speaker Change: I'm sorry, uh, Kevin can you
Speaker Change: Actually 1 moment please, if we can just pause for a moment, we will be right back with you callers.
Speaker Change: Uh, sorry for any sorry, for any inconvenience. I can hear you now.
Speaker Change: Please wait the conference will begin shortly.
Speaker Change: And ladies and gentlemen, thank you so much for your patience. We are experiencing some technical difficulties there. I would now like to hand it back to Karen and the crew to continue the Q&A session speakers, please. Okay, I don't
Speaker Change: Know, we can move on to Bob.
Speaker Change: Next caller.
Speaker Change: Okay great. Uh so thank you for your question, Greg. And yes, our next question comes from the line of Bob Wong with Morgan Stanley. Bob, please go ahead.
Bob Wong: Hi. Good morning, folks. Uh, my first question uh, is about Latin America, uh, you had a pretty strong Latin America growth in 2024. And this quarter on a constant currency basis, it was even stronger. Uh, can you maybe help us, uh, to get a better understanding of maybe? Is there like a specific country? That's driving this or specific products? Or can you maybe just help us about the the opportunity there going forward. Uh, things of that nature.
Speaker Change: Yeah, you know.
Speaker Change: Bob, we're
Bob Wong: throughout.
Bob Wong: with the significant presence and
Bob Wong: You know, Mexico number 3, um, PNC writer. Number 3, auto insurance in Mexico. I got 60 offices.
Bob Wong: thousands of Agents do well, do over a billion or premium
We have an important Partnerships with the likes of new bank in Brazil and and we're the exclusive partner joint venture partner with Banco de Chile.
Bob Wong: In Chile, those businesses and our consumer business, their life and non-life are growing.
Bob Wong: Quickly and, and doing quite well. Um, Argentina.
Um, as the country has improved, we've had a presence forever.
Argentina in the commercial PNC, business is growing. So our consumer business outpaced, our Commercial Business in the quarter, its enduring, um, and it's across France. It's not, you know, simply a trade and it's across franchises that are moving from strength to strength with a lot of opportunity.
Bob Wong: No, no, no.
Bob Wong: Certain volatility signature to it. It's not smooth, every quarter, and quarter to quarter, but you measure it over a per any period of time. And, you know, we expect, you know, depending on how the world goes, um, double digit growth in Latin, America continues over time.
Speaker Change: Okay. No, that, that that's really thank you for that. Yeah, double digit growth going forward, pretty strong. Um, maybe.
Bob Wong: If we can.
Um, ask about the the what this might be a little hypothetical. So um Administration has talked about potentially phasing out FEMA and if that were to happen, does that have an impact on your high net worth business in the coastal States? Um, would you considering partner with other uh insurers to write flood insurance business, uh, to support your high Network book. Just curious if you have any thoughts there,
Bob Wong: No, you know. Look um
Bob Wong: FEMA on flood insurance provides a relatively modest limit. It, it's an important limit to, you know, the average consumer. But for highet Words, um, if you think of the, the values of their homes that, you know, you measure in the millions and FEMA gives you a quarter of a million or so of coverage. Um, well, it's not something that you sneeze at. It's not
Bob Wong: Um, it it, it doesn't move the needle and the private flood market and chub is part of it. Um, has been growing, um, it's on a selective basis, um, with frankly, better mapping and underwriting than than than females.
Bob Wong: Um so I I don't see in a, you know, FEMA phases out. Um, I think it's bad for
Bob Wong: The country, um, I would, I would restructure FEMA and how it provides coverage.
Bob Wong: I wouldn't provide the same coverage to the same individual to rebuild and rebuild and rebuild in the same flood zone.
Bob Wong: Have multiple claims on the other hand.
Bob Wong: Um, as a first loss in flood for people who, who have no other choice, um, I I, from a social perspective, I would keep it.
Speaker Change: Okay, really appreciate the color and thank you for the insight.
Bob Wong: You're welcome.
Bob Wong: Thanks Bob.
Speaker Change: And our next question comes from the line of David Moto Madden with evercore, isi David, please. Go ahead.
Speaker Change: Hey thanks. Good morning. Uh Evan. Um,
Speaker Change: It was good to see uh Global PNC growth excluding FX is is fairly stable again this quarter at around 6:00 to 7:00. Um you know same as it's been the last few quarters. Despite you guys stepping away from uh some large accounts uh property business.
Speaker Change: I guess. Can you, um, you know, that would imply that I guess growth on the other 80% of the book where conditions are attractive, accelerated a bit, maybe you could just touch on that. Uh, just the durability of the growth on that 80% uh where conditions are a bit more attractive and then maybe just talked about on the other 20%, your outlook there.
Speaker Change: Yeah, um, the pattern of growth.
Speaker Change: um, X, that 20%
um,
Speaker Change: first of all, overall, you know, the math is pretty simple. Um, it's double digit growth
Speaker Change: and um, when you add it,
Speaker Change: All Together commercial and consumer PNC. Um, the pattern of growth is durable.
Speaker Change: and the pace of growth um as we can see look forward um is is durable to
Speaker Change: Um, it's around Middle Market and small commercial in the United States where the second largest Middle Market writer in the US.
Speaker Change: Um and between that and small commercial the opportunity, and I've talked about it before, it's not just cyclical, it's it's secular to me, is is um is enduring.
Um, our high net worth business, which has been growing.
Speaker Change: Rapidly and, and, and our margins from.
Repricing and remodeling, and all the work we did over a over about a 6 year period from 06 through 2021. Um, quietly, um, has put us in such a, a solid position and I expect that pattern to continue both growth and the kinds of margin, um, that it has generated when I look in Asia and I look at the consumer businesses, um, and the like Latin America, the digital
Speaker Change: Distribution related growth for Consumer business on 1 hand.
Speaker Change: And our growing agency auto business, in selected countries on the other, and our direct marketing A&H, and our travel insurance businesses, more people travel in the region that that pattern of of growth and opportunity continues. And when I look at our Middle Market and small commercial, because we are so deep in those markets, which is what it takes, um, from Australia, it's a, it's a Malaysia to Thailand to Singapore, to Taiwan, I expected to continue to expand, um, when I look at our Powerhouse business in Korea, um, which is a direct marketing, fundamentally a direct marketing A&H, business with a life.
Speaker Change: Codons. Um, I expect that to growth to not only continue I expect in time for that to accelerate and to do better. Um, so throughout Asia the themes of opportunity commercial and consumer are enduring in their in front of us like Latin America there you know it's a region that has its vast. It's much it's multiples the size of Latin America.
Speaker Change: and it has, you know a certain volatility signature to it, so it isn't, you know, every quarter exactly the same or every year exactly the same, but as I look at it, it's, it's, it's where we're leaning in and we see more opportunity our business in Europe,
Speaker Change: Um, the same. Um, it's not just a large Commercial Business and Specialty. It is a middle Market business and it is it's expanding, um, and growing more quickly in a variety of markets throughout so um, overall I look at this pattern of growth and I look at earnings and I look at the stability of margin and it all is about that diversification of the company are are ens business in the US and I'm going to finish with this, you know, we printed about a 5.6% growth property was negative.
Speaker Change: You look under the covers of of that and the balance of lines of business, you know, from construction to casualty, but Primary in excess.
Speaker Change: Um, our pet insurance business. Um our our growing, our growing nicely.
Got it. Thanks for that, I appreciate that. Um, and then, um, just a quick follow-up, uh, just in North America, personal lines, great to see another quarter of current accident year. Xcat loss ratio Improvement. Um, is that purely rate earning in over Trend? Or was there anything else in there in the result? That drove that Improvement this quarter?
No, we should combination um and you know, right over Trend. You know it's it's it's over a period of time. I mean that's been iterative over a year that has curtain. I said it would drop over time into the 70s and that's what it's not. Oh that's what it needs to do. Given its got exposure.
Speaker Change: Um, um, but it's that and it's it's underwriting shaping of the portfolio.
Speaker Change: And um we have a greater knowledge and ability that's a standout of who we are. Um behind that was this is very complex underlining.
Speaker Change: Um, and the property exposures are very complicated.
Speaker Change: And our insight into underwriting and managing that um, stands out and we focus on that great.
Will never be enough to get you there. Um, underwriting doesn't equal rates, it equals risk selection and insight into risk, engineering and managing the properties.
Speaker Change: Got it. Thank you.
David: All right. Thanks David.
Speaker Change: And our next question comes from the line of Brian Meredith with UBS Brian, please go ahead.
Brian Meredith: Yes, thanks, Evan. I'm just curious. Um, looking at the North American Commercial, you know, right now we're seeing, you know, written pricing call it below. Lost Trend. It looks like I we had a period now for that business. That, you know, we're seeing kind of peak margins and we should maybe expect margin to deteriorate. You know, going forward here granted from a very attractive level.
Speaker Change: um,
Speaker Change: I think that's simplistic. Yes, the headline number but that's why you peel it back. Casualty is ahead of loss cost, probably.
Speaker Change: On the other hand property right now is pricing, is is negative and there is a more modest loss cost around but that loss cost trend is there. So, you know, 1's going 1, way 1's going the other way, and on the other hand, you know, we grew professionals, we grew Financial lines, this quarter um first time in in most of our portfolios, not all, but most and quite a while and in certain areas we're beginning to get right. Um, and then I look at comp
And comp pricing was um, better than the prior quarter. So there's there's puts and takes on it. Um, and then as our mix of business changes. So you know you you you look at it. Our loss ratio overall across the globe dropped. North America loss ratio, um, commercial was flat. Um, and that's, um, a mix of business change.
Um, occurring as well, um, more mid and small versus large. Um, and then within ens, um, a shift
Speaker Change: so,
Speaker Change: um, I don't
Speaker Change: Envision. As I look from what I see right now. Um the deterioration, um as your mental model, if you do it too, simplistically would imagine
Brian Meredith: Thank you. That's really helpful. And second question, Evan. I'm just curious and I think you've tried about this a little bit in the past, um, you know, a number of large health and fair insurance companies. Um, have had some issues with medical costs inflation. And I'm wondering, you know, how that could potentially affect, you know, the PNC Insurance business workers comp, how are you thinking about that in the context of shop?
Speaker Change: Yeah.
Speaker Change: Medical. And
Speaker Change: Remember there's um, Compass different that way and um we have been careful, first of all, in our in our loss cost Trend factors we use in reserving for medical, or we use factors that frankly are ahead of what we observe because it has a long tail to it and by the idiosyncratic nature of what we see in health insurance companies. Um, what drives the trend there in medical inflation is not the same factor.
Speaker Change: And so we're not seeing it.
Speaker Change: Thanks.
Speaker Change: Thank you, Brian. And our next question comes from the line of Meijer Shields with KBW Mayer, please go ahead.
Meijer Shields: Great. Thanks so much and good morning. Um Evan, I was hoping you could talk about how sensitive your large domestic accounts are to social inflation in terms of the coverage that they're looking for is demand for more coverage. More uh, deeper broader coverage, is that changing in response to elevated social inflation?
Meijer Shields: um,
Meijer Shields: deeper and broader coverage, and have an orbit, have a positive Arbitrage with insurance companies. The trend has gone the other way.
um, over the last couple of years last bunch of years, um, terms and conditions around, casualty, it varies by area, obviously, you know, particularly anything with
Meijer Shields: Logistics and Automobiles Trucking related. Um retail slip and fall Etc. Um, those have been really the areas experiencing social inflation um, which is true in Middle Market as well. Separate from class actions around the chemical or or, or something in the Stream of Commerce that way, let's separate them out. Um, terms and conditions have
Meijer Shields: Tightened retentions. I mean, that's what I talked about for. Um, you'll recall for a, a multi-year period where we were reshaping the book and and took a hit to revenue, who cares? Because we were adjusting client retention, which leaves more with them, what not? No, no dollars swapping.
Meijer Shields: While prices increased for the layers of the dollar swap because frequency and severity of losses. Increasing
And has been increasing. I think there's an equilibrium that that that that is being achieved now where the terms and conditions and the pricing.
Meijer Shields: Um, reflect and are keeping Pace with what is a hostile liability environment. Um, and so and there is that balance between client and and carrier. But there you there, make no bones about it. There's been more of a of a shift risk of risk.
Meijer Shields: to a degree. Um, you can't say that the Middle Market is immune from that, at all. Um, um, case in point, I'll just point you to Middle Market Commercial Auto as a poster child, for the last number of years, bunch of years and, um, very difficult line for Middle Market carriers. And that's all about lit.
Meijer Shields: Mitigation social inflation. It's a poster child for it.
Speaker Change: Okay, that is tremendously helpful. Um, a second question on the international side is there any way of
Speaker Change: Uh, I guess breaking down growth between market share gains of current product and adding more sophisticated Insurance products to markets, where the economy is developing, but where Chubb would presumably have less competition.
Speaker Change: It's a combination of both. We're, we're, we're driving in and gaining market share.
Speaker Change: Um,
Speaker Change: There is on 1 hand. Know, there's a third 1 in their number 2, new insurance buyers, those economies are growing. So lots of new businesses and not just new businesses, but new Industries as those economies develop. And so, it's not where Middle Market may have been Main Street retail, and restaurants and, and, um, and Shop owners. Um, it now expands as the, as the economy is developed, they have more technology related and services related businesses, um, Etc, that develop with the economy on this people have more money. Um, so it's new buyers.
Speaker Change: These are individual countries.
Speaker Change: Okay, that's very helpful. Thank you so much.
Meijer Shields: Thanks. Meijer.
Speaker Change: And our next question comes from the line of Mike. Zrinjski with BMO Capital markets Mike, please go ahead.
Hey Greg, good morning. Um going back to the uh, social inflation, uh conversation. Um, on the um, North America commercial loss Trend, which I believe you said is around 6 and a half. Um, um, is there a way to kind of tease out or estimate? Um, how much of that?
Speaker Change: uh,
Speaker Change: Uh is attributed to litigation Finance or or social inflation. More broadly is there a way to kind of think about that.
Speaker Change: um,
it's it's not an easy number to break out but um we do our own private work around that and and information and our ability to
measure where there is litigation financing or not is growing but it's still not, it's still not.
Speaker Change: Clear. It's not transparent enough yet.
Speaker Change: Okay, that that's fair. I appreciate. It's a, It's Complicated measure, what we can measure, but I think frankly, you know, I want to help you with your question. Um, it varies, what we can see, very clearly it very spiced State, um, to a very large degree, um, and that is the liability laws.
Speaker Change: Um, we can measure how much comparative negligence as an example, um, depending on the law around comparative negligence. So I may be the only party in a suit that has money. And yet, I was only 15% liable. But in that state, I'm required to pay a 100% of the loss. If no 1 else can, um, and, and then comparative negligence between the claimant. Um, and the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the defense, and the, and the, and the litigant, um, what is comparative fault? And how do you put, how do you put dollar amounts around it? We can measure those things economically.
Speaker Change: Uh know that this kind of law change in this place will have this kind of impact. And by the way that's what's driving. A, a a a a a Louisiana, or a Florida or a Georgia to torture for
Got it, that's helpful. Um, maybe pivoting as my follow up, use the uh, larger account, uh, property Marketplace, which you gave good commentary on. Um, you know, is there a way to think perspective, you know, given the kind of extent of the uh, pricing declines. Um, you know, from a modeling perspective would it, would it be fair to say that, you know, if we have a normal
Speaker Change: Um, catastrophe or loss year and the remainder of the year that that this is kind of a, the, the, the worst would be behind us or, or is it just too tough to size up and, um, we'll see what competitive? Uh, Dynamics. Do you know next year or later this year?
Speaker Change: I I I'm sorry Mike for a moment. I
Speaker Change: I, um, I blanked out on you because the colleague was telling me to mention non-economic damages in my liability, which is another another issue, and we can measure it. Um, were you talking about property insurance? And if we have cash, what is happening in the pricing? Yeah.
Speaker Change: Yeah, I guess just large account property. You know, investors have asked us a lot of questions about just the extent of the price. Decrease, you know, so look here is here is the mental model? I want to give you
Speaker Change: The others who are, who are listening about.
Speaker Change: um,
Speaker Change: large account buys large limits of property, they break it up into these layers and it becomes simply a trading business. If you're not, the 1 is the paper and managing the claims and doing the engineering and issuing policies, all over the world for them which most have no capability to do.
Speaker Change: Us related or it's admitted related and um, come to play and you get this frenzy. When there's too much Capital, please give me a share because it looks well for us.
Speaker Change: Um, it responds over. Time to Lost costs.
Speaker Change: Both the if you under pricing both and we're not, we're on the edge of that right now.
Speaker Change: um, and they and um, and so
Speaker Change: it'll respond to Major catastrophes, it'll respond to frequency of attritional loss that will occur over time. Um, and whether it whether it is in 1 season will depend on how major the cats are and how many of them are? Where are they?
Speaker Change: um, so not a simple answer, um, but all ultimately in the business, um, you got to get an adequate price to make any money in
economics dungeons.
Speaker Change: Just the timing question.
Speaker Change: Thank you.
Speaker Change: You're welcome.
Thanks Mike.
And our next question comes from the line of victim gandi with HSBC vicram please go ahead.
Hi, good morning. I hope you can hear me. Thank you for the opportunity. I um have a question on the investment income.
Speaker Change: Uh, which has uh flatlined over the past 3 quarters despite a reasonable growth in Investment Portfolio. Um, I see the duration has been pretty stable Forex, if anything should have helped the past quarter, so does it all boil down to the pressure on yields outside the US? Uh, and then I do hear, um, you you your your comment about, um,
Speaker Change: Uh, you know, positive trajectory um, of investment income.
Speaker Change: over the next quarter and I wonder what what really changes that
Speaker Change: Hey vicram it's Peter. Um I think of the prior quarters, we disclosed that in certain quarters we had lower than expected, private Equity related income which can be volatile
Speaker Change: And at the same time, what we're signaling with the forward guidance is, as the cash flows have come into the portfolio, particularly over the last quarter that we expect investment income to continue to grow quite nicely.
Speaker Change: Okay, so if I understand correctly, the it's it's really the the the alternative income coming in uh that's going to help.
Speaker Change: Q3 it's in combination of the alternative coming out of which a component can be more variable and a component is is fairly stable. And then the cash flow is coming in the portfolio which have um, been quite significant over the past quarter of which next quarter will have the full benefit of
Speaker Change: growing invested us. All right, thank you.
Speaker Change: I just left point of the 6 billion dollar increase. Thank you.
Speaker Change: And and um, a follow-up. Um, just curious on your thoughts around, uh, share BuyBacks.
Speaker Change: since um,
Speaker Change: The Mix Change uh, in the business might probably mean the you know, it
Speaker Change: Even though there is growth in the business it might not be as capital intensive. So what's the best way for us to think about share BuyBacks looking forward?
Speaker Change: Yeah, we don't give guidance and nothing's really changed, right? We keep capital for risk and opportunity and we continue to see significant opportunity. You'll see that we have continued to buy back on a regular basis. We bought back more this quarter than the prior quarter, we're not going to do it on a on a, you know, consistent basis. We'll Flex based on what we see happening in the market. And what we see the stock, the stock market, and our stock, what we see happening in the
Speaker Change: Insurance market. And as you see, we just reauthorized
Speaker Change: 5 billion open-ended for share repurchase.
Speaker Change: Okay, thank you.
Speaker Change: Thank you.
Speaker Change: Thanks vicram.
Speaker Change: And our final question today comes from the line of Alex Scott with Barkley's, Alex, please go ahead.
Alex Scott: Hey uh, for the first 1, I just wanted to ask about reinsurance and see if you could provide more color around just the the step down and premiums and and how you're finding the market in terms of, you know, just relative attractiveness and price adequacy.
Speaker Change: Yeah, the the reinsurance business we wrote a large structured transaction last year, that didn't eat.
Speaker Change: And that was more property related.
Um,
Speaker Change: um, where we, it's not a big deal, we just simply didn't like the trades.
Speaker Change: Um, and so we're disciplined and didn't chase it.
Speaker Change: Thank you understood. Um, second question I had is on, you know, capital and just you know how you're viewing excess Capital. If you could update us on that and you know, just sort of the pecking order of things you're interested in and and if there's any uh, you know, heightened interest around m&a at all.
Speaker Change: Um, we're deploying.
Speaker Change: Um, our capital.
Speaker Change: And ways that are creative to our Roi.
Speaker Change: Whether it is deployed.
Toward Insurance business.
Speaker Change: It's deployed to.
Speaker Change: Support.
Speaker Change: Or invested asset.
Speaker Change: Or Investment Management strategy. So we feel
Speaker Change: Quite good.
Speaker Change: Management around the capitol, we hold at the same time. It provides us.
um, flexibility and opportunity which is the the the second derivative
Speaker Change: Um, for growth in our business, organic or inorganic that may occur from time to time.
And finally, we return Capital as Peter went through to shareholders.
Um, in a reasonably steady way.
Speaker Change: Um, through both dividends and share repurchase, which together was over a billion dollars, this quarter?
Speaker Change: Thanks a lot, Alex.
Speaker Change: Thank you.
Yes. Thank you Alex and again that does conclude our question and answer session today. Thank you all so much and I would now like to turn the call back over to Karen buyer for closing remarks Karen.
Karen Byer: Thank you everyone, for joining us today. And if you have any follow-up questions, we'll be around to take your call. Uh, enjoy the day. Thank you.
Speaker Change: thanks Karen and ladies and gentlemen again that concludes today's call, thank you all for joining and you may now disconnect
Speaker Change: Please wait the conference will begin shortly.