Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Chubb Ltd (CB, Financial) reported a core operating EPS of $5.38, up 9.3% year-over-year.
- Premium revenue growth was strong across North America P&C, international P&C, and life insurance segments.
- Investment income grew by more than 25%, reaching $1.5 billion.
- Life segment income increased by 8.7%, with international life income up double digits.
- The company achieved a combined ratio of 86.8%, indicating excellent underwriting results.
Negative Points
- P&C underwriting income was flat due to higher catastrophe losses globally.
- Catastrophe losses amounted to $580 million, up from $400 million in the prior year.
- Financial lines pricing was down 3.2%, with rates down about 3.5%.
- The corporate run-off portfolio had adverse development of $93 million, mostly from molestation-related claims.
- The company noted that the underwriting environment in financial lines is not favorable, leading to a strategic reduction in this area.
Q & A Highlights
Q: Can you clarify the loss cost trends in North America, specifically regarding the 8% figure mentioned?
A: (Evan Greenberg, CEO) The loss cost trend for P&C lines, excluding financial lines and comp, is 7.3%. The 8% figure refers to pricing, which exceeded loss costs for P&C lines.
Q: Are you rejecting more business to maintain pricing above loss cost trends?
A: (Evan Greenberg, CEO) We wrote $1.3 billion of new business, a record for us. The market is reasonably rational, and we are only writing business where we can earn an underwriting profit. In some classes, we are getting rates well in excess of loss costs.
Q: Why isn't there more growth in casualty lines despite good pricing?
A: (Evan Greenberg, CEO) Casualty is growing in areas we deem appropriate. We have been restructuring in troubled classes and increasing retentions, which has impacted growth. However, overall, casualty is up.
Q: Are you adding additional IBNR (Incurred But Not Reported) reserves due to social inflation?
A: (Evan Greenberg, CEO) We have already raised our loss picks and loss cost trends over the past few years. Our current loss cost trends remain steady with what we have contemplated.
Q: Can you discuss the growth in North America personal lines, particularly the 42% figure mentioned?
A: (Evan Greenberg, CEO) We did not grow North America personal lines by 42% year-to-date, but we have seen double-digit growth. This growth is broad-based across various geographies and driven by improved pricing and demand for Chubb's differentiated coverage and service.
Q: Can you expand on the opportunities in accident and health and personal lines globally?
A: (Evan Greenberg, CEO) Our accident and health business is growing at a healthy double-digit rate across various regions, including North America, Asia Pacific, and Europe. Our digital distributed consumer lines business is also growing well, leveraging over 200 digital platforms.
Q: How do you balance protecting margins and pursuing growth in North America commercial lines?
A: (Evan Greenberg, CEO) We grow where we can earn a reasonable return and trade rate for growth or vice versa as needed. Our published combined ratio of 86.8% reflects our strong underwriting results despite higher cat losses.
Q: Can you break down the prior-period development in North America commercial?
A: (Evan Greenberg, CEO) We studied large account comp and auto liability, among other casualty lines. Comp produced about $287 million in release, while auto liability resulted in a $116 million charge.
Q: What is the role of the new executive hired to handle inflated jury verdicts?
A: (Evan Greenberg, CEO) The executive will focus on galvanizing efforts among corporate America to impact the litigation environment through political and regulatory arenas, aiming to change laws and address issues like mass tort and litigation funding.
Q: Can you provide an update on the agricultural business given the drop in corn prices?
A: (Evan Greenberg, CEO) Growing conditions are very good, particularly for corn and soybean. The base price is only off by 10% from last year, which is within a reasonable range for us.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
