Operator:

Good morning. 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 Second Quarter 2024 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Karen Beyer, Senior Vice President, Investor Relations. Please go ahead.

Evan Greenberg:

Good morning. As you saw from the numbers, we had another great quarter. We produced core operating EPS of $5.38, up 9.3%. Premium revenue growth reflects strong results in our businesses around the world. North America P&C, International P&C and Life Insurance demonstrates the broad-based diversified strength of our company. Our underwriting results were simply excellent. We published a combined ratio of 86.8%. We grew investment income more than 25%. Life segment income was up 8.7%, with International Life up double-digit. Core operating income for the quarter was $2.2 billion, bringing year-to-date operating earnings to $4.4 billion, up 13.5% and a record six-month result. P&C underwriting income in quarter of $1.4 billion was essentially flat as a result of higher cat losses globally. As you know, it was an active quarter for the industry. Our losses of $580 million compared with $400 million prior year, and they were in line with our modeled expectations, while last year's second quarter losses were light. On an ex-cat current accident year basis, underwriting income of $1.8 billion was up over 11% with a combined ratio of 83.2%, both were record underwriting results. Investment income topped $1.5 billion, up nearly 26% and a record as well. At June 30, our reinvestment rate is averaging 5.9% and our fixed income portfolio yield is 4.9% versus 4.5% a year ago. Our liquidity is very strong, and investment income will continue to grow as we reinvest cash flows at higher rates. Our invested asset now stands at $141 billion and we expect it to continue growing. Life segment income of $276 million was right in line with our plan. Our annualized core operating ROE for the quarter was 13.3%, with a return on tangible equity of over 21%. Peter will have more to say about financial items. Turning to other matters, growth, pricing and the rate environment. Consolidated net premiums for the company increased 11.8% in the quarter or 12.3% in constant dollars. We are a large diversified global insurer and our growth this quarter is again a reflection of who we are. Growth was broad-based geographically by product and customer segment, both commercial and consumer, from North America commercial to North America consumer, international commercial, Asia, Europe and Latin America to international consumer, particularly Asia and Latin America. In terms of the commercial P&C rate environment, overall conditions remain favorable in both property, which is naturally more competitive, and casualty, which is firming in those classes that require rate. Loss-cost inflation remains steady within what we have contemplated in our pricing and our reserving. Property has become more competitive as more capital is entered. Our book is well priced, and terms and conditions remain steady. Casualty is firming in the areas that need rate, and we see this trend in casualty enduring, and I'm going to give you some more color by division. So, let's start with North America. Premiums, excluding agriculture, were up 8% and consisted of 12.3% growth in personal lines and 6.7% growth in commercial, with all P&C lines, including comp, up 8.7%, and financial lines down about 3%. We wrote over $1.3 billion of new business, which is a record, and our renewal retention on a policy count basis was 90%, both speak to the reasonably disciplined tone of the market and our excellent operating performance. Premiums in our major accounts and specialty division increased 6.5%, with P&C up about 8% and financial lines down 2.5%. Our E&S business grew about 8.5%. Premiums in our middle market division increased about 7.5%, with P&C lines up almost 11% and financial lines down 4.5%. Again, the underwriting environment in North America is generally favorable and rational, financial lines aside. P&C pricing, excluding financial lines and comp, was up 8.3%, with rates up 5.5% and exposure change of 2.7%. Financial lines pricing was down 3.2%, with rates down about 3.5% and exposure up 0.3%. In workers' comp, which includes both primary and large account risk management comp, pricing was up 4.2%, with rates up 1.6% and exposure up 2.6%. And breaking down P&C pricing further, property pricing was up 5.3%, with rates up about 1.1% and exposure change of 4.2%. Large accounts shared and layered in E&S property pricing was flat to down, while in the middle market, rates continue to rise, about 7%. We are big in all three, and again all three are priced adequately. Casualty pricing in North America was up 11.7%, with rates up 9.9% and exposure up 1.6%. Loss-costs in North America remain stable, in line -- and in line with what we contemplate in our loss picks. Loss-costs for P&C, excluding financial lines and comp, are trending at 7.3%, with short-tail classes up 5.3%, and casualty, excluding comp, at 8.6%. We are trending our first dollar work comp book at 4.6%. As I said, when it comes to financial lines, the underwriting environment in a number of classes is simply not smart. We are trading growth for a reasonable underwriting margin. We are trending financial lines loss-costs at just over 5%. On the consumer side of North America, our high net-worth personal lines business had another outstanding quarter, with premium growth of over 12%, including new business growth of 30%. Premium growth for our true high net-worth segments, the group that seeks our brand for the differentiated coverage and service we are known, for grew 17%. These numbers are really impressive. When you consider our high net-worth personal lines division, it's almost a $7 billion business. Our homeowners pricing was up 14.6% in the quarter, while the loss-cost trend remains steady at 10.5%. Turning to our International General Insurance operations, net premiums were up over 16.5% in constant dollar. Our International commercial business grew nearly 14%, while consumer was up almost 21%. Asia Pacific led the way with premiums up 36%, and excluding China's contribution, premiums were up over 9%. Latin America had a strong quarter, with premiums up about 12%, and Europe retail grew over 9%, with the continent up 11%. 41% of our Overseas General division's premium is consumer, both A&H and personal lines, and it's growing at a good clip. In the quarter, premiums in our International A&H business were up over 10.5%, led by Asia Pacific and Europe. Our International personal lines business had another excellent quarter, with growth of 32%, led by Asia Pac and Latin America. We continue to achieve positive rate to exposure across our International commercial portfolio, with retail, property and casualty lines pricing up 6.1% and financial lines pricing down 4.1%. Loss-cost inflation across our International retail commercial portfolio is trending at 5.8% with P&C lines trending 6.1% and financial lines trending 4.8%. In our International Life Insurance business, which is fundamentally Asia, premiums were up 31.7% in constant dollar. Excluding China, life premiums were up almost 10%. Depending on the country, growth was driven by tied agency, brokerage, bank assurance and direct marketing distribution channels. International Life earnings grew over 15% in the quarter in constant dollar. Lastly, Global Re had a strong quarter with premium growth exceeding 40% and a combined ratio of 72.7%. Growth was property-driven, both risk and cat. And in the quarter, we wrote more one-off structured transactions, which contributed to our growth. In summary, as you could see, we had a great quarter, and again, our results reflect the strength, the breadth and the depth globally of the company. We are confident in our ability to continue growing our operating earnings at a superior rate through P&C revenue growth and underwriting margins, investment income and life income. I'm going to turn the call over to Peter and we're going to come back and take your questions.

Karen Beyer:

Thank you. We'll be happy to take your questions.

Michael Zaremski:

Hey, guys. Good morning. Most of the focus, as you know, and you guys -- you gave good commentary, Evan, as you usually do on loss-cost trends. I'm trying my best to use the live transcript to true up some of the quarter-over-quarters, but I believe you made commentary about loss-cost trend in North America, specifically being stable and kind of in-line with your expectations, but I think you said there was a -- it was, excluding comp, in the 8%s, and I believe last quarter was in the 7%s. So just curious, is loss-cost trend changing a bit in terms of the trend line?

Michael Zaremski:

Would you say -- got it. Okay. Thanks for the clarification. So, just sticking with that and I guess this will just be my follow-up, there's a number of indices out there which kind of show that pricing in certain parts of the marketplace, even ex-financial lines are sub-6%, sub-5%. Would you say that -- I know you've talked about not accepting all business, that's not priced adequately. Would you say that Chubb's kind of in a doing that more so today in terms of kind of saying no to more business than it usually does in order to kind of make sure you're keeping pricing above loss-cost trend, whereas maybe others don't appear to be doing that when we see their trend lines on their loss ratios?

Michael Zaremski:

Okay. It does. Appreciate it.

Operator:

The next question comes from the line of Paul Newsome with Piper Sandler. Please go ahead.

Operator:

Your next question comes from the line of Brian Meredith with UBS. Please go ahead.

Evan Greenberg:

Good morning, Brian.

Evan Greenberg:

No. We're growing property, and the unit count grew well. So, I don't -- and I don't know what -- we don't have any that reflects unit count.

Evan Greenberg:

You can't see number of policies. And you're talking property, right?

Evan Greenberg:

No, casualty is growing, and it's growing in the areas that we think we should be growing. And then, we have some areas, remember, in large account where we have been restructuring, in troubled classes and increasing retentions and we have accounts we've gotten off of or who have left us because of change of terms and all of that, it was worth about $50 million in the quarter. And that will run its string. It's particularly auto liability related. And -- but other than that, certain classes grew, some stayed flat, but overall casualty was up.

Evan Greenberg:

That's a strange way of framing for me. You're either raising your loss pick, which is IBNR, it's IBNR in casualty, generally you're -- if it's on a more recent year, it's all IBNR. If it's case -- if it's due to case reserve on recent years, then hang on to your hat. And if you're -- whereas on older, older years, you could be raising your loss pick based on the actual incurred claim. So, to me, it's just simply another way of saying are you raising your loss picks on more recent years. We already have raised our loss picks. It's already been baked into our business as we've gone along, and we've raised our loss-cost trends and we take rate against loss-cost and on a written basis and then to earn through, we pick -- we've been picking higher loss ratios over the last few years. And that's just steady. We haven't adjusted our loss picks this year for what we see in loss-cost trends. The loss-cost trends, as I said, remain steady with what we have contemplated. Now, as you do reserve studies, there are individual classes where if you're taking reserve charge, you're taking reserve charge because that, by its nature, means you're raising the loss picks, which includes IBNR on a cohort of years. It may be that you're raising it just because of development you see on older years, it may be that you see that flowing through to more -- to change your view in more recent years and in which case you raise them, but that's study by study. I hope that answers your question.

Evan Greenberg:

You're welcome.

Bob Huang:

Hi, good morning.

Bob Huang:

Yeah. Good morning. Just want to shift gears a little bit to personal line. You grew in pretty incredible 42% premium year-to-date. Can you maybe talk about the driver of this growth in North America personal? And also, how should we think about just the growth trajectory of this line going forward? I understand, obviously, homeowner and auto is going to be very different, but just curious your thoughts going forward.

Bob Huang:

Great. Thank you. Yeah, the 42%, personal auto, I misspoke there. Yeah. So, the second question is, in the press release, you talked about, you're seeing a broad set of opportunities in accident and health and personal lines across the globe, right? Can you maybe expand on where you think that opportunity resides? It feels like your European business is doing well. Your Asia business is doing well. Is this globe -- are you referring to more broadly speaking, or is it more Southeast Asia, South Asia? Can you maybe give us a little bit more details there? Is it more organic, inorganic, things of that nature?

Bob Huang:

Really appreciate that. So, I think we'll look forward to more commentary down the road about this. Thank you.

Operator:

Your next question comes from the line of David Motemaden with Evercore ISI. Please go ahead.

David Motemaden:

Good morning, Evan. I had a follow-up just on the North America P&C long-tail ex-comp...

David Motemaden:

...loss trend. It sounds like that increased about 1 point sequentially. Just wondering what you saw in the quarter.

Paul O'Connell:

I think last quarter, we had given casualty number, which was 8.6% in comparison, that's standalone casualty number. The number you just cited was P&C ex-financial lines and ex-workers' comp, it didn't change that quarter.

David Motemaden:

Yeah. I did. It was a little faint, but I think I got most of it. So, it just sounds...

Paul O'Connell:

The numbers didn't change sequentially. It might have been a different mix or different combination of product lines. So, the 7.3% that we cited was total ex-financial lines and ex-workers' compensation.

Paul O'Connell:

Property and casualty.

Paul O'Connell:

No.

David Motemaden:

Got it. Okay. That's helpful clarification on that front. I guess, we've obviously heard a lot of noise this quarter from just across the industry on more recent accident year casualty reserves. Doesn't sound like there's been any big shifts in the claims environment just based on what you guys have done, but I'm wondering if you might just give some of your observations in terms of how we should be thinking about just the loss environment as the claims environment sort of normalizes following COVID.

David Motemaden:

I really appreciate it. Thanks, Evan.

Operator:

Your next question comes from the line of Yaron Kinar with Jefferies. Please go ahead.

Evan Greenberg:

Well, let's see. I think it speaks for itself. We grew at a pretty healthy clip when you look at it. Our middle market P&C business grew at 11%. Our E&S business grew at 8.7%. Our large-account business grew a little slower clip. Our financial line shrank, while P&C grew. I've gone through that where rates achieve a risk-adjusted return from everything we can tell, that we contemplate achieving, we're growing that business as fast as we can. Where it's not achieving it, we're striving to achieve it. Where we can't earn an underwriting profit, we're shrinking. Where it's adequate, we're growing as fast as we can. And we have the capital, the depth of balance sheet and an appetite and knowledge and geographic reach and the distribution brand, the underwriting capability to grow in those areas where we want to grow. And there are times we'll trade rate for growth and we'll -- there are times we'll trade growth for rate. We're doing both. And when it comes to the current accident year combined ratio, I've said before and I've written this, it's very interesting about the industry's current accident year combined ratio ex-cat. Property is a much larger part and a growing -- everybody is more cat-levered because of the changes in the [reinsurance] (ph) market, the rates and terms. And we take the cat loss out of the numerator, but in the denominator, we leave all the premium, that naturally drives down our current accident year combined ratio in mix of business all else being equal. So, it's -- I look -- that's a part and parcel of the published combined ratio, which is the primary number that everyone should look at. And the current accident year to look through volatility is a secondary indicator. And that's how I think of about. And I think what we published of an 86.8%, which has higher cat losses than prior quarter -- prior year's quarter because volatility in property is simply an outstanding number. I hope that answers your question. This is a company with big appetite and -- but a big appetite and an ambition to grow when we can earn a reasonable return.

Evan Greenberg:

No, I'm done.

Evan Greenberg:

There is. We've met -- you can't see it, and we're not going to disclose anything like that. But it is apparent to us, again, we wrote $1.3 billion of new business, a record. And we had a renewal retention rate policy cap of 90%. I rest my case.

Evan Greenberg:

You're welcome.

Mike Ward:

Thank you. Good morning. I just -- I was wondering on the prior-period development, I don't think this has been asked, but I was hoping you could maybe break down the -- I think it was $144 million in North America commercial. Just sort of curious, if there were any notable movements within that, including long-tail casualty versus workers' comp?

Mike Ward:

Okay. That's really helpful. Thank you, Evan. And then maybe kind of on a similar theme, but I saw some media sort of reporting on, an executive that you hired specifically to handle inflated jury verdicts. Just wondering if you could expand on that role and how you expect the industry to actually...

Mike Ward:

Thank you.

Operator:

Your next question comes from the line of Gregory Peters with Raymond James. Please go ahead.

Evan Greenberg:

Sure. Behind the curtain? No curtain. What an energizing thing for this organization. These -- we have a very well-oiled and effective succession management and key employee process. We've been engaged in for over 18 years. And at my level, it involves keeping our eye on about 500 people across the company. The people who were promoted and the change of responsibilities is a reflection of that succession management process. This was -- these changes were planned over 18 months ago. The individuals, [John Keogh] (ph), and we had planned it. John Lupica, and we had planned for it. It's very orderly. It was individuals who've had long history with the company. They're of our culture. They have the talent, the capability to do more. The company, to state the obvious, look at the size and scale of it, it's growing. And therefore, the structure has to adapt and the talent that you put in place has to reflect the opportunity set and all of the dynamics around management of the organization that you need to address all at once. We have bigger strategic issues that have to do with opportunities and we just talked about litigation. These massive structural things in front of us that Chubb is a leader, as it has a responsibility and an opportunity, participate in, and we need leadership that can address that. All the day to day of our business and managing the day to day of our business grows more complicated and is more diverse. And so, part of my job is to reflect on all of that and to use the succession process we have that produces a deep, well-diversified bench of talent to match up against all of that. And that's what it reflects. And what's so great is everyone who was on that -- those announcements know each other well, have been together well for a long time, and it just -- it means the team just gets stronger.

Evan Greenberg:

I think we dug all for the sand out of that box. So, I'm like, I'm done, but go ahead.

Evan Greenberg:

I'm so known for my patients.

Evan Greenberg:

Yeah. I'm going to be very careful because I'm not going to jinx myself in the middle of the game. But where we have concentration of exposure, it is a very good growing season so far, particularly for corn and soybean. We have a well-diversified book. We're heavier, and we've always been west of the Mississippi, but in a very broad swath of geography, Midwest, upper Midwest, in particular. And the growing conditions are very good. When you see spot markets at this moment and it just -- it's not something to obsess about or look at really because it reflects what people were imagining. It's a speculative class and they're imagining what the -- what's the government going to say about growing and they're all out there looking at the years of corn on -- counting the years on stocks right now. And that's what's driving price at the moment. We'll see how it pans out, but right now, it's shaping up well.

Evan Greenberg:

John, you wanted to say something about base price?

Evan Greenberg:

Yeah, which was in within a lot of the deductible. Frankly, if you -- and is a little outside deductible averages, but, look, who knows, we'll see.

Operator:

I'll now turn the call back over to Karen Beyer for closing remarks. Please go ahead.

Operator:

Ladies and gentlemen, this concludes today's call. Thank you all for joining, and you may now disconnect.

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 First Quarter 2024 Earnings Call. [Operator Instructions] I would now like to turn the call over to Karen Beyer, Senior Vice President, Investor Relations. Please go ahead.

Operator:

[Operator Instructions]

David Motemaden:

First question. Evan, I just wanted to maybe get a little bit more detail on the $95 million of unfavorable reserve development on the long tail lines that you guys took this quarter? And maybe just unpack that a little bit more would be helpful.

Evan G. Greenberg:

Well, the growth is coming. It wasn't a little bit. It was a step change in the rate we got exceeded loss costs, let alone pricing, which includes exposure change. And that is what contributed substantially to the growth. We grew exposure as well, particularly in our middle market long-tail business.

Operator:

Your next question comes from the line of Mike Zaremski with BMO Capital Markets.

Evan G. Greenberg:

Yes. First of all, our loss picks reflect the reality of the environment, the inflation we observe. And that includes any actions as we know them to be that might ameliorate it around tort reform. Tort reform is going to be a long-term never-ending process. As you say, it's not going to be federal. State by state, it could be county by county, depending. And it depends on the class of business as to the kind of reform that's required to bend that curve and loss cost. The insurance industry can support tort reform and does. The insurance industry can't particularly lead it. We don't have the printing press. This is ultimately paid for by corporate America, and it's paid for by consumers, by the products and the services from corporate America, it's a tax on everybody.

Evan G. Greenberg:

Yes, it comes from 3 sources -- or a couple of sources. It comes from frequency of loss and from various perils. It comes from -- and so there you could think weather-related. You can also think water-related. And so the infrastructure impact to housing stock itself. It comes from wage inflation, and it comes from materials, which -- remember, we ensure not the average homeowner, we're ensuring those who are more affluent. And our product is a richer product in terms of how it responds to loss and the position it places you back in following loss. We try to duplicate exactly what you had before the loss, not sort of like it, but we duplicate it.

Operator:

The next question comes from the line of Gregory Peters with Raymond James.

Evan G. Greenberg:

Yes. Greg, keep in mind, percentages are 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, is off of a relatively small base. So in dollar terms, it's nice. Thank you very much to all our Global Re colleagues, but it's not a large amount. We allocated given the pricing environment and given structure and given underlying pricing and structure of cedent's portfolios. We allocated more -- incrementally, as I said in the opening, more CAT capacity with 2 Global Re, which means they're writing a bit more CAT excess and a bit more property proportional and excess per risk. And it's across the globe where they see favorable conditions. That's predominantly with the CAT results.

Evan G. Greenberg:

You can ask anyway, and you'll get a lousy answer, go ahead.

Evan G. Greenberg:

Greg, I'm at rest. 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, it requires certainly a damn good ROE. The cash that we hold is accretive to shareholder returns. And look, we're a global company with a lot of global opportunity and our eyes are always open. But as I said, I'm at rest. Don't hold your breath.

Ryan Tunis:

I guess first question, just on financial lines. I think you said that it's quite frankly, dumb. Now that's obviously like a pretty broad set of various lines within financials. I think I heard you say that you're shrinking in mid-market, too. And my perception is that, it was a little bit more disciplined than some of the major accounts. So just curious if you could just take us within financial lines, whether it's account size or D&O excess whatever, like where are folks acting more or less irrationally?

Ryan Tunis:

Got you. And a follow-up, just shifting gears. Just curious about priorities in U.S. personal lines. It kind of 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 a little underwritten. Just maybe if you could update us on -- yes, like what are the key sets of priorities in terms of managing that business right now?

Operator:

Your next question comes from the line of Brian Meredith with UBS.

Evan G. Greenberg:

Yes. I'm going to let John Lupica give this -- it's really coming -- it came this quarter from 2 things. And that LPT, I forget had on an impact on and it distorted the gross in that.

Evan G. Greenberg:

That's really...

Evan G. Greenberg:

It's really transactional, not fundamental.

Evan G. Greenberg:

I just see...

Evan G. Greenberg:

I did give it to you. Are you asking me to go back and do it again? Do you actually want me to look -- I'll give it to you if you want me to take my notes and do it [indiscernible]. Listen, North America, I said pricing increased 12.8% including in P&C, including rate of 9.4% and exposure change of 3.1%.

Evan G. Greenberg:

Loss cost. So we're trending short tail at 6.8% and long tail -- short -- sorry, overall loss cost 6.8%; short-tail, 5.3%; long tail, 7.6%. Yes, this is full service call.

Jian Huang:

Hopefully, I'm not asking anyone to repeat anything. But just a quick question on the -- on your annual shareholder letter, right? You talked about the willingness to pull back on unprofitable lines a demonstration of underwriting discipline, which is 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. Is the financial line somewhere you're looking at as a...

Jian Huang:

No, that's...

Jian Huang:

No, I think that's very helpful. Yes, it helps me contextualize things.

Robert Cox:

A high-level question. So Chubb produced an 86% combined ratio, which has continued to improve and net investment income contributions to ROEs have gone up. I know there's more bifurcation than ever with respect to pricing adequacy 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?

Robert Cox:

So I'm curious -- yes, I'm just curious when you think basically rate and loss trend will be at similar levels versus rate exceeding loss trend.

Robert Cox:

And maybe just a follow up on that. Curious if you think that with data and analytics, these cycles are becoming less volatile over time.

Operator:

Your next question comes from the line of Jimmy Bhullar with JPMorgan.

Evan G. Greenberg:

Next question, Jimmy.

Evan G. Greenberg:

No.

Evan G. Greenberg:

We did expect a change of loss cost pattern frequency in particular. And we have talked about it during COVID that we didn't take the head fakes that loss costs during shutdown, obviously, courts are closed, frequency plummets and as does severity. And at that time, we maintained our view. We saw right through it and said, trends aren't changing, so we continue to trend. It's just a question of reporting on what period does it get reported in? So we expected that the trend doesn't change, but the reporting pattern changes. So therefore, if you really want to look at it in a correct way, you'd say, it went down during COVID to reaccelerate after COVID and then the expected cohorts of claims in aggregate still appear, and that's what we've seen. The pattern post COVID is not out of line with our expectations in our pricing and loss picks.

Peter Enns:

For next year and after, it's just too early to say. There's 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.

Cave Montazeri:

There was nothing called out this quarter with regards to the Baltimore bridge losses? I appreciate it's early days, but is there any color worth sharing with us on this topic?

Operator:

Your next question comes from the line of Elyse Greenspan with Wells Fargo.

Evan G. Greenberg:

Well, what I said, Elyse, thank you, is the premium growth because 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 grew nicely. Property was our biggest growth area. Casualty grew, particularly in our middle market area and E&S. And rate and price had a substantial contribution to the growth, though we also grew new business where pricing versus loss cost is healthy to us.

Evan G. Greenberg:

I'm not going to help you with your worksheet, I'm sorry, Elyse. 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 LPTs virtually every quarter. But excluding the unusual size of it, and what we view as the unusual, the onetime underwriting action in large account that I described, the net of that, we gave you a growth rate, and we said that's the underlying growth rate for that quarter. That is not -- we didn't say that's a run rate for the year. This is a diversified commercial and personal property casualty book of business. And you're hardly -- we don't give guidance on growth for the year.

Karen Beyer:

Thanks, everyone, for joining us today. If you have any follow-up questions, we'll be around to take your call. Enjoy the day. Thank you.

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 Fourth Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Karen Beyer, Senior Vice President, Investor Relations. Please go ahead.

Evan Greenberg:

Good morning. We had an outstanding quarter and finish to the year, in fact a record year. Our quarter’s results included double digit premium growth, record P&C underwriting and investment income and strong life operating income, 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 law. While the quarters results are impressive and important, the full year results that really matters most. All things being equal, one quarter hardly tells a story. 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%. P&C underwriting income was a record $5.5 billion, with a combined ratio of 86.5% and investment income was up 33% and top $5.3 billion. As you can see, the balance between underwriting income and investment income was about 50-50, a very healthy balance. 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 our return on tangible was 24.2%. Tax benefit contributed, so excluding that our core operating ROE was 13.6%, and our tangible ROE was 21.6%. Excellent numbers. Finally, for the year, per share of book intangible book value each group 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 Chubb. Our fundamentals are very strong, in the quarter itself was simply a continuation of the year. For the quarter for operating income was $2.3 billion, excluding the tax benefit, or $5.54 per share, up 36% and 39% respectively. The one-time tax benefit then added $1.1 billion or $2.76 a share. Our underwriting performance in the quarter was a result of stronger earned premium growth, excellent underwriting margins with the published combined ratio of 85.5% and a current action at year of 84.3%. We had strong prior period reserve developments in both North America and Overseas General and relatively light CAT losses. P&C underwriting income for the quarter was $1.5 billion. Our prior year reserve development in the quarter and for the year was $177 million and $773 million, respectively, which speaks to the consistent strength of our loss reserves. 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, with 33% over prior year. Our portfolio yield at the end of the year was 4.3% versus 3.6% a year ago, and our reinvestment rate is currently averaging 5.3%. 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 items. Now turning to growth, pricing and the rate environment. Consolidated net written premiums for the company increased over 13% in the quarter, with P&C up 12.5% and life up 20%. Of the P&C 12.5%, consumer loan lines were up 20% and commercial P&C 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 13.5%, with P&C uptown and life up 52%. Again Chubb is a globally diversified company. And our growth last year demonstrates the broad base nature of our operations. North America, commercial P&C, a very large and important business, representing 40% of the company, grew 7.5%. The balance of the company, the other 60% grew 18%. U.S. high net-worth personal lines grew 11%. International consumer P&C grew 18%, international commercial P&C grew over 11%, and life grew 52%. In terms of the commercial P&C rate environment, the pattern was the same, as we have experienced all year, price increases in the quarter, and property and casualty lines exceeded loss costs in both North America and our International division. While globally, rates and prices continued to decrease in financial lines led by D&O. Getting to the detail for the quarter and beginning with North America. Premiums were up 9.4% or 6.2%, excluding agriculture. Consisted of growth of 12.1% in personal insurance, and 4.4% in commercial insurance. Within the 4.4% P&C 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 P&C premiums up 9.8%, while financial lines were essentially flat. Our E&S business had a strong quarter with growth of 16% in our wholesale brokerage lives. On the other hand, our divisions which serves large corporates, major accounts grew only 1.4%. Growth in Major was adversely impacted by about 7.5 points, or $125 million of premium from underwriting actions, we plan 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 retentions, with the balance due to loss business. For clarity, these actions in fact, contribute to future growth in underwriting income. Regarding future, North America commercial growth, 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 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%, including rate of 5.1%. An exposure change that acts like rate of 2.1%. Let me provide a bit more color around rates and pricing. Pricing for commercial property and casualty was strong. Up 12.4%, property pricing was up 17.3, with rates up 12.9 and exposure change of 3.9. Casualty pricing in North America was up 12.4%, with rates of 10.8% and exposure of 1.4%. And workers comp, which includes both primary and large account risk management, pricing was up 4.6%, with rates of 1.1% and exposure up 3.5%. We are trending loss costs in North America at 6.6%, with short tail classes at 5.5% and long tail excluding comp at 7.3%. We are trending our first dollar workers comp book at 4.6%. For financial lines, the underwriting environment remains aggressive, particularly Indiana, and rates continue to decline. We know this business extremely well, at our trading growth for underwriting margin, at income, where we need to. In the quarter rates and pricing from North America financial lines in aggregate were down 6.1% and 5.5% respectively. We are trending financial lines loss costs at 5.1%. For our agriculture business, late season, drought related developments in crop insurance, resulted in an elevated combined ratio for the quarter in the year. For context, we published a 95.4% combined ratio for the year and earned an underwriting profit of $146 million. Similar to the previous year’s result. Crop insurance is a CAT like business, by its nature vulnerable to weather volatility, but with very good risk reward dynamics if managed well. Crop insurance has been a great business for Chubb. Rain and Hail is an amazing company, and since acquiring them in 2010, for about $1.1 billion, we burned almost $2 billion in operating profit with an IRR of 26%. 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% and new business growth was up 34%. There is a continued flight through our product, service and capability. We are the gold standard 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 year ex-cat basis. In our homeowner’s business, we achieved pricing of 17% in the quarter, while our selected loss costs trend remains steady, 10.5%. Turning to our international general insurance operations, which had an outstanding quarter. Net premiums were 19.3% and the combined ratio was 85.9%. Our international commercial business grew 13.2%, while consumer was up 29.5%. For the year, Overseas General grew 14%. And our international business growth this quarter was broad base, with all major regions producing double digit growth, again, illustrating the global nature of the company. Asia led the way with premiums up 37%, made up of commercial lines growth of 21% and consumer up 56%. Europe and Latin America had very strong quarters as well, with growth of 15.5% above for both. We continue to achieve improved rate to exposure across our international commercial portfolio. With pricing in our retail business up over 7%, Property and casualty line pricing was up over 10%, while financial lines pricing was down about 2%. Loss cost inflation across our international retail commercial portfolio is trending at 5.8%. The P&C lines trending 6% and financial lines trending 4.9%. Within our international consumer P&C business, our A&H and personal lines divisions, both had strong quarters, and for the year, their growth was 14.4% and 21.4%, respectively. Growth again was led by Asia. In our international life insurance business, which is basically Asia, premiums were up 26%. For the year, we reported life income of just over $1 billion or 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 overall are favorable, though they vary by business and geography. It’s an underwriters market, and that's what we are. We have hit the ground running in ’24, and while we are in the risk business, and volatility is a feature of that, we are confident in our ability to continue growing operating earnings at a double digit pace, through P&C revenue growth and underwriting margins, investment income, life income. Now I’ll turning the call over to Peter, and then we're going to come back, to take your questions.

Karen Beyer :

Thank you. At this point, we're happy to take your questions.

Mike Zaremski :

Hey, good morning. Thanks. Maybe a first question on loss cost trend. We always appreciate all the granular color you gave. So in North America, it looks like 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 -- I guess, directionally been inching higher for years now, I guess, ex the onset of the pandemic potentially. But just curious, the underwriting result is excellent. 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 that it is still a great underwriting environment in the year to come?

Mike Zaremski:

Okay. That's helpful color. Lastly, my follow-up, with the -- with great earnings levels, maybe Peter or Evan, you can update us on the drag from excess capital and whether we should be just kind of continuing to deploy a mix of it into to buybacks and then hoarding some for opportunistic M&A, if there's really no change to that.

Mike Zaremski:

Thank you.

David Motemaden :

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 reserves?

David Motemaden :

Great. Okay. That's helpful. And I appreciate that on the go-forward impact. And then I guess, just my follow-up question, just on the growth in North America commercial on 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 growth, if I were to look at 2023, 7.5% growth in North America commercial. 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?

David Motemaden :

Understood. Thank you.

Gregory Peters:

Well, good morning. In the press release and your comments, then 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 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?

Gregory Peters:

Okay. And then another calls out, you talked about the large account excess casualty business. And I know you provided some color on your comments. So just looking for a little bit more detail. There's obviously been noise in the market about casualty and maybe the success casualty is one of the sensitive subjects that's hitting the marketplace. But any additional color there would be helpful.

Gregory Peters:

Great. Thanks for the detail.

Operator:

Thank you. Your next question comes from the line of Ryan Tunis with Autonomous Research. Please go ahead.

Evan Greenberg:

Oh my God, no. You're overthinking. No. 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 at similar actions and no impact to the franchise. It's not like we're wholesale underwriting our book of business. So a very large, very healthy book of business.

Evan Greenberg:

I'm sorry, Ryan.

Evan Greenberg:

No, I just editorialize that that's why it gave you an amount of money and told you how it was it just a fraction.

Evan Greenberg:

I think it is radar adequacy is strong. Quite strong. I'm not going to go into any more detail other than to say that and we triangulate it 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 of occupancies, geographies it's in, perils it's exposed to, you add it all up. We feel very good about that book of business. If you want to know more, you're going to have to join the company. That was a joke, Ryan.

Meyer Shields:

Great, thanks. And good morning. Within North American personal, I was hoping you could get an update as to how much of the business that wanted to move to E&S to actually now on E&S paper? And how much opportunity there is for that shift in 2024?

Meyer Shields:

Okay. Understood. That's very helpful. Second question is sort of the same theme. Within agriculture, at least on the crop side, can you talk about how you can manage through climate change risks where you don't have flexibility in pricing or policy language?

Meyer Shields:

Okay. That’s perfect. Thank you so much.

Yaron Kinar :

Thank you. Good morning, everybody. Evan, I wanted to follow up on your previous answer with regards to the E&S 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? Why would you like the admitted market over E&S?

Yaron Kinar:

Makes sense. I appreciate the answer. And then if I could shift gears to China. I think you 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 selling consumer and business sentiment in China and maybe the equity market performance there. How do you go about -- are you making any shift in how you're managing the book with that?

Yaron Kinar:

Thank you very much.

Operator:

Thank you. Your next question comes from the line of Bob Huang with Morgan Stanley. Please go ahead.

Evan 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. We adjusted for that and disclose that a quarter or two ago. Workers' comp is behaving in a very steady way.

Evan Greenberg:

Well, I don't think the geopolitical risk for Europe and our business in the EU. I don't think they have a political risk, geopolitical risk exposure any greater fundamentally than we do in the United States. And so if you're concerned for Europe in a significant way, then you better be concerned right here at home in America. When I get to Asia, I don't believe that the United States and China are going to war. And I think all sides seek a stability. And so while there is OEs tail risk, in Asia related to North Korea, related to Taiwan, in particular, I think it's more risk at this moment around someone making a mistake. By the way, I'm going to leave you with this. The mental model, if there is a conflict in Taiwan, where there is a conflict to do with North Korea, it is hard to believe it will confine itself to a small geography. We then have a major global issue. And I think those were in leadership position on all sides are acutely aware of us and they too, care about their children and their grandchildren.

Operator:

Your next question comes from the line of Elyse Greenspan with Wells Fargo. Please go ahead.

Evan Greenberg:

No, there was no true-up current accident year true-up that distorted the quarter whatsoever. It's steady. And the improvement is a combination of change of mix of business, which, frankly, at least, I would think you'd notice that everywhere because it's the more property levered portfolios are lower that current accident year. Ex-CAT is going to become number one. And then number two, beyond mix, it's rate in excess of loss cost across most of the business earning its way through.

Peter Enns:

Yes, it's too complicated and early to know in terms of how the Bermuda law will interact with whatever gets adopted at OECD, Switzerland and the U.S., we really don't have any visibility on it.

Evan Greenberg:

Yes, Elyse.

Operator:

Your next question comes from the line of Brian Meredith with UBS Financial. Please go ahead.

Evan Greenberg:

I'm sorry, Brian, you're kind of breaking up on. I am not able to hear it.

Evan Greenberg:

Huatai 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 from memory, it's just a couple of points. We'll take it offline with you, but it wasn't -- we'll have more color in the 10-K MD&A on a couple of lines.

Evan Greenberg:

No. getting enough rate is -- that's what we have to do. 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, you end up paying for it. It's really a state-by-state solution, and that -- how they -- the amount of awards that are handed out. And by the way, look at simple laws 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 100% of the cost. There are states that -- where there's a 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. When you look at those right there, you can see a part of the problem that is occurring. Particularly where trucking company is 1% or considered 2% at fault. Again, they're adjudicated 100% of the payment suffering and injury of that individual. That's a state-by-state problem. Look at litigation funding and look at what -- how many states require that you simply disclose who's funding the lawsuit. Because that has an impact on how injury will then view the injured party. They always march out the most sympathetic individual 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's funding the lawsuit. That's a state by state. And if you were looking for a federal solution, my God, we can't even agree on a budget and we can address the deficit or entitlement spending. Morgan would address this when the trial bar is funding half of Congress.

Operator:

Your next question comes from the line of Mike Ward with Citi. Please go ahead.

Evan Greenberg:

No. I don't have an expectation. I think when all of a lot of that naive hungry capital that 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 cost 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 as you look at the number of mouths to feed that get on a D&O tower right now. And as the losses come, good look, in many instances, I wish the brokers well in collecting from each of those players who now have remarks, because they wrote the business and now they have to pay the claims and they're losing money. But all that happens, we're just -- this is the business. There are pockets of the business that are done at times, and it's just one of those moments fine. We've got plenty else to do.

Operator:

Thank you. I will now turn the call back over to Karen Beyer for closing remarks. Please go ahead.

Operator:

Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Chubb Limited Third Quarter 2023 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. [Operator Instructions] Thank you. It is now my pleasure to turn today's call over to Ms. Karen Beyer, Senior Vice President and Director of Investor Relations. Ma'am, please go ahead.

Evan Greenberg:

Good morning. As you saw from the numbers, we had another outstanding quarter. Our performance was marked by double-digit global P&C premium growth, world-class P&C underwriting results, including an 88.4% combined ratio, record net investment income, and strong life operating income, all leading to record operating earnings per share. Once again, our premium revenue growth was well spread and broad-based, with excellent results in our commercial and consumer businesses in both our North American and international operations. Our annualized core operating ROE was 13.5%, with a return on tangible equity of 21.2%. Core operating income of $4.95 per share was up 58% over prior year. And for the first nine months, we have produced record operating income of $5.9 billion, or $14.27 per share, up 27.5%. In the quarter, our underwriting performance was driven by a combination of strong earned premium growth, excellent underwriting margins, which included an ex-cat current accident year combined ratio of 84.3%, or 83% excluding agriculture, favorable prior period reserve development in both North America and Overseas General and relatively average cat losses compared to our expected. P&C underwriting income of $1.3 billion was up almost 84%. Our positive reserve development speaks to the strength of our reserves and our reasonably cautious or conservative approach to reserving. As I've said for years, we generally strive to recognize bad news early and are slow to recognize good news. We're in a balance sheet business. Our loss reserves are the most important part of the liability side of our balance sheet. On the asset side, record-adjusted net investment income of $1.4 billion was up $361 million, or 34% over prior year. Our portfolio yield was 4.1% at the end of the third quarter versus 3.4% a year ago, while our reinvestment rate is currently averaging 6.2%. We have very strong liquidity, and our investment income run rate will continue to grow as we reinvest our cash flow at higher rates. We are growing income without a change to our invested asset risk profile. In the quarter, we increased our ownership in Huatai Group to 69.6% and now we're consolidating results, which were accretive to EPS and ROE. Earlier this month, we closed on additional shares and our ownership stands now at over 72%. I expect this to increase further and reach between 83% and 86%. A summary of the financial impact of Huatai is provided for you in the earnings release and the financial supplement. Peter will have more to say about financial items, including cats, prior-period reserve development, investment income, book value, ROE and Huatai. Now, turning to growth, pricing and the rate environment. Consolidated net premiums for the company increased over 9% in the quarter, made up of 8.4% growth in our P&C business globally and about 15% in our Life division. Global P&C premium growth, which excludes agriculture, was 12.3%, with commercial lines up almost 10.5% and consumer lines up about 17.5%. In agriculture, crop premiums were lower than last year due to the timing of when we recognized them. Year-to-date premiums are in fact up modestly. As to the higher combined ratio in agriculture this quarter, we simply recognized a quarter earlier than last year what we think is the likely development for the year based on what we know today about crop conditions and pricing. In terms of the commercial P&C rate environment, rates and price increases in property and casualty lines, in aggregate, remained strong in the quarter in both North America and our international divisions, while decreases in financial lines in North America continued. We remain vigilant and diligent about staying on top of loss cost inflation. Beginning with North America, commercial premiums, excluding agriculture, were up 8.7%. P&C growth was 10.5%, excluding financial lines, which were up 1%. Our very large middle market division had its best quarter of the year with premium growth of 16.3% and middle market financial lines up 1.5%. Our major accounts and specialty division grew 7.2% with P&C up 8.4% and financial lines flat. Overall, pricing for total North America commercial increased 9.3%, including rate of 5.9% and exposure change that acts like rate of 3.2%. Let me provide a bit more color around rates and pricing. Pricing for commercial property and casualty was up 13.9%. Property pricing was up 23%, with rates up 16.6% and exposure change of 5.5%. Casualty pricing in North America was up 11%, with rates up 8.7% and exposure up 2%. In workers' comp, which includes both primary comp and large account risk management, pricing was up 5.5%, with rates essentially flat and exposure up 6%. We are trending loss costs in North America at 6.7%, same as last quarter. And again, that compares to pricing of 9.3%. In general, we're trending loss costs in short tail classes at 5.8%. And long tail, excluding workers' comp, loss costs are trending at 7.1%, and our first dollar workers' comp book is trending at 4.7%. For financial lines, the underwriting environment remains aggressive, particularly in D&O. Rates have continued to decline. In the quarter, rates and pricing for North America financial lines, in aggregate, were down 4.8% and 3.8%, respectively. We're trending financial lines loss costs at 4.7%. Renewal retention for our commercial businesses in North America was 92.7%, and our new business grew 14%. On the consumer side, our high-net-worth personal lines business had another excellent quarter, with premiums up over 9.5%, with strong retention and new business growth. In our homeowners business, we achieved pricing of 15%, while our selected loss cost trend was similar to last quarter at 10.5%. Turning to our international general insurance operations. Net premiums were up about 21.5%, and this includes a 7.5% contribution to growth from the Huatai consolidation. Our international commercial business grew 17.5%, while consumer was up 28.4%. In our international retail business, growth was broad-based with all major regions producing double-digit growth. Latin America led the way this quarter with premiums up 23%, made up of commercial lines growth of 16% and consumer up more than 28%. Europe and Asia Pac had strong orders with growth of 14.2% and 10.2%, respectively. We continued to achieve improved rate to exposure across our international commercial portfolio, with pricing up 9.3%, rates up 5.7%, and exposure change of 3.4%. Property and casualty lines, pricing was up 11.7%, with rates up 7.1% and exposure up 4.3%. While financial lines pricing was up 2.3%. Loss cost inflation across our international commercial portfolio remains steady from last quarter, trending at 6.6%. Within our international consumer, our A&H and personal lines divisions both had strong quarters, with premiums up 16.5% and over 40%, respectively. Personal lines growth in Latin America rebounded sharply with premiums up 43% on the back of growth in our Mexican auto portfolio where we're taking significant rate actions to reflect the loss cost environment. In our international life business, which is almost entirely Asia, premiums were up nearly 20%, including the impact of the Huatai consolidation. Life segment income was up nearly 15%, $288 million. In summary, we had a simply outstanding quarter, contributing to outstanding year-to-date results. We are growing exposure in a thoughtful and balanced way, mindful of risk environment and underwriting conditions, which are favorable in many areas of our business. Looking forward, we are confident in our ability to continue growing revenue and operating earnings globally, which in turn drive EPS through the three engines of P&C underwriting income, investment income, life income. I'm going to turn this call over to Peter, and then I'm going to come back and take your questions.

Karen Beyer:

Thank you. At this point, we're happy to take your questions.

Bob Huang:

Good morning. Congratulations on the quarter. My first question is actually on reserving. You obviously talked about recognizing bad news first and good news later. Curious about your thoughts on the recent development. European reinsurers have talked more about the cautionary view on the U.S. casualty reserves. Social inflation has been around for years, but this is clearly something that European reinsures are talking more about now. Just given their recent renewed caution, so to speak, on the U.S. casualty side, are there any adverse trends that you're seeing across the industry that would justify this view? Any specific factors that you would like to call out? Curious about your view on this. Thank you.

Bob Huang:

Okay, got it. That's actually very helpful. My second question is on cyber insurance. There has been a few very notable cyber breaches within consumer sector, casino, gaming, and more recently, a cybersecurity firm also had a pretty serious headline breach. Given Chubb is a industry leader in cyber insurance, curious -- and also given that your recent partnership with SentinelOne, curious about your view on how the recent headline news could impact pricing environment as well as the industry as a whole? And then, how you think about Chubb positioning in cyber insurance going forward?

Bob Huang:

Thank you very much for that.

Greg Peters:

All right. Good morning, everyone. Well, I assume it's good morning, Evan, unless you're in Singapore or in Europe.

Greg Peters:

Well, awesome.

Greg Peters:

Yeah. So, I was listening to your comments and you mentioned -- you highlighted the Mexican auto business. You obviously highlighted the success of your North American personal lines business. It feels like we're dealing with a once in a generation hard market in the auto insurance market. And I know you have a specialty business for your personal lines in North America, but I'm wondering if you have any thoughts of branching out into other areas of the market considering all of the dislocations that are occurring there?

Greg Peters:

Thanks for the color there. I guess, I'm going to pivot to this follow-up question on -- back to the reinsurance business. I think I asked you about this in the previous quarter, but it's just striking to me when I look at your global reinsurance business and I don't see a lot of growth in the top-line. I know you are growing your property exposures, but where there's a lot of rhetoric in the marketplace about where we are with the 1/1 renewals with pricing and reinsurance, I thought I'd ask you about your views on how you think pricing for reinsurance is going to evolve over the next year. If I look at your top-line results, it probably isn't -- probably don't have a favorable view, but throw that out for you to comment on, please.

Greg Peters:

Got it. Thanks for the detail.

Operator:

Your next question comes from the line of David Motemaden with Evercore ISI. Your line is open.

Evan Greenberg:

Yeah, thanks so much, David. Look, it's pretty simple. It was a couple of non-repeat or one-off fronted or structured deals. So, adjusting for those -- and really like two or three, the gross growth was actually in line, right in line with that. So, there's no underlying trend or broad sort of systemic. It was simply related to a couple of fronting deals.

Evan Greenberg:

It's no -- there's nothing new, no news story about it. It's auto and excess casualty, and it's those years of '17 to '19, maybe a little bit of '16, and that's about it.

Evan Greenberg:

Yeah. This is -- there aren't more words for me to that -- we've all been talking about it, so, for a number of years, and it is -- just continues to develop a bit and we just strive to stay right on top of it.

Mike Zaremski:

Hey. Great. Good morning.

Mike Zaremski:

Good morning, Evan. I guess I'll ask a question specifically on the North America commercial segment, and it's kind of has to do with, I guess, reserves too, taking off with some of the other questions. But if I just look at year-to-date, and this definitely isn't a Chubb-specific phenomenon, but I'll cite Chubb stats, reserve release levels running, let's just say, 50% below last year, 50% below even Chubb's like historical five years looking at our model. I guess it implies something has changed, And I guess the question we get from investors -- and by the way I'm cognizant the absolute combined ratio is great. But the question we get from investors is, if reserve release levels have changed so much, why haven't loss cost inflation assumptions changed materially? Is that anything you'd like to comment there?

Mike Zaremski:

That's very helpful. I appreciate you partially correcting the way I was thinking about it. I guess my quick follow-up is, you've talked more than some of your peers about exposure acting as rates. And maybe it's not fair, but some of your peers say that only some exposure act as rate. I don't know if that's a conversation you want to have or you want to delve into whether you think the vast majority of Chubb-specific exposure really does act as rate more so than others, or anything you want to add there? Thanks.

Mike Zaremski:

Very helpful.

Operator:

Your next question is from the line of Paul Newsome with Piper Sandler. Your line is open.

Evan Greenberg:

No, not really, Paul. We just had better information. By the nature of this growing season, for instance, winter wheat -- you know that in the third quarter, and winter wheat, as an example, is under pressure this year relatively. And so that goes into the loss ratio number. California had storm events and et cetera that revealed losses earlier. So, we just had better data to be able to adjust this year in the quarter than we -- in the third quarter than we did last year where it really emerged very late, I think tail end of harvesting.

Evan Greenberg:

No. We're -- in fact, we've used, and we -- not this quarter, we had done it in the past. We've reflected on a bit higher medical inflation trend, recognizing that medical inflation overall is more elevated. And what you see in a current period when you're booking an accident year, is only so relevant because comp has a tail to it and medical has a tail to it. And so, you reflect that -- at least here, we reflect that prudently and how we think about medical inflation when we construct our loss picks.

Evan Greenberg:

You're welcome.

Tracy Benguigui:

Good morning. Real quick for clarification, your commentary about 13.9% pricing increases in North America commercial, that's ex financial lines, right?

Tracy Benguigui:

Okay. So keeping that in mind, it looks like we're seeing strong but sequentially less momentum in property pricing. Is there seasonality to keep in mind? Otherwise, can you shed some light on the competitive environment, writing capacity entering, ability to pass on higher reinsurance costs or, to some extent, more retention of risk by insureds to contain costs?

Tracy Benguigui:

No doubt. 23% is great. I was just comparing that to 31.5% in the second quarter.

Tracy Benguigui:

Okay. Very good. Also real quick, just a follow-up to David's question. Was there any sizable workers' comp offset to the $55 million adverse development you took for long-tail lines?

Tracy Benguigui:

Okay. But was it large enough where it might have been a larger charge you took in auto and excess liability, you might have seen a nice offset?

Tracy Benguigui:

Okay. Thank you.

Yaron Kinar:

Thank you. Good morning, everybody. First question. So, we're hearing from some executives that they're voicing concern about medical loss environment looking ahead. While it's currently benign, there is a concern that it may be picking up. So, how are you thinking about that with regards to both kind of prior accident year reserves and forward appetite? And honestly, I'll leave it to you whether you want to discuss this on a company basis or what your views are with regards to the industry and how it has to approach this? And maybe even touch on which lines other than workers' comp, that I think we're all aware of, could be most impacted by that shift?

Yaron Kinar:

Okay. And do you think the industry is in a relatively similar position?

Yaron Kinar:

Well, I guess I could maybe phrase it a different way. Since you have adjusted for this already, I would think that your pricing is also accordingly adjusted. Are you finding that your prices are still competitive with the industries? Or is the industry still essentially pricing for a lower loss inflation?

Yaron Kinar:

Okay. Fair enough.

Yaron Kinar:

Point taken. Makes sense. The other question I had, North America Commercial, the underlying loss ratio improved year-over-year. Nonetheless, was a bit elevated relative to the first half. Were there any one-offs this quarter or in the first half? Or should we look at the year-to-date as a reasonable run rate?

Yaron Kinar:

Fair enough. And certainly great combined, no...

Yaron Kinar:

Noted. Thank you.

Operator:

Your next question comes from the line of Brian Meredith with UBS. Your line is open.

Evan Greenberg:

No, I'm not seeing. It's pretty -- this industry just has -- does what I think is a pretty dumb stuff at times. And financial lines is a very broad category. It has everything from public D&O to private D&O, non-profit D&O, errors and omissions of all kinds, cyber insurance. So, it's a real dog's breakfast of a lot of different lines. And each one goes to its own drum right now a bit. There are large pockets in there that I think are stable and/or managed adequately or handled decently. Then you have a couple where, my God, the number of MGAs that have pens today and the amount of capacity that proliferates. And by the way, a lot of that capacity coming back to the same balance sheet aggregating back, and you've got this sort of circular firing squad, which we tend to do now and again. It's in those areas that I don't see green shoots. And then the rest behaves reasonably to me. So, I wouldn't lump -- my first message to you, don't lump financial lines altogether. And then secondly, there's a couple of dumb areas.

Evan Greenberg:

I haven't seen it really, because higher interest rates are also a proxy for loss cost inflation. So, you've got an industry that I think is trying to stay on top of loss cost or has that impetus behind them to stay on top of loss cost in casualty. And other than in workers' comp, it hasn't been totally benign as you well know, and it's been around for a while. So, I think that higher yields are ameliorating. And by the way, if you do the math and you translate the higher yields to what it means to earn the same return, what combined ratio affect you would get to achieve the same return, it's modest in combined ratio relatively, 1 point here, 1 point there, it's not like, wow, I can raise my combined ratio as 5 points to achieve the same 15%, as an example, risk-adjusted return. No, you can't, and we run the math.

Evan Greenberg:

You're welcome.

Alex Scott:

Hi. I wanted to ask about the environment broadly in Asia, across the different countries. And just now that you've scaled up that business in a bigger way with the addition of Huatai being consolidated and so forth. What are you seeing in the environment? Where do you see the growth opportunities looking ahead?

Alex Scott:

Thanks.

Karen Beyer:

Thank you, everyone, for joining us today. If you have any follow-up questions, we'll be around to take your call. Enjoy the day.

Operator:

Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the Chubb Limited second quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. If you’d like to ask a question at that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again press star, one. Thank you. It’s now my pleasure to turn today’s call over to Ms. Karen Beyer, Senior Vice President and Director of Investor Relations. Please go ahead.

Evan Greenberg:

Good morning. As I mentioned on our last call, I’m coming to you this quarter from Singapore, our regional headquarters for Asia Pacific. The outlook in Asia for growth across our businesses - commercial P&C, as well as consumer, non-life and life, both short and long term is significant. The region is simply energizing. We have a large organization of talented executives and a strong, diverse capability focused on the execution of a broad set of strategies throughout the region. As you saw in our press release, we had a simply outstanding quarter; in fact, another record quarter performance with double-digit premium revenue and earnings growth as a result of world-class P&C underwriting results that produced an 85.4 combined ratio, record net investment income and a doubling of our life earnings. Our premium revenue growth was so well spread and broad-based, driven by outstanding double-digit growth in our commercial and consumer P&C businesses in both North America and internationally, and over 100% growth in our life business. Our annualized core operating ROE was 13.8 with a return on tangible equity of 21%. Core operating income topped $2 billion, up 14% or 16.5% on a per-share basis. Both were record results. For the first six months, we produced operating earnings of $3.9 billion or $9.32 per share, up 13% and 15.8% respectively. Our underwriting performance resulted from a combination of strong premium growth, excellent current accident year margins with a combined ratio of 83.3, and favorable prior period reserve development particularly in North America. On the investment side, record adjusted net investment income of $1.2 billion was up $290 million or 31% over prior year. Our portfolio yield is now 4% versus 3.2% a year ago, with our reinvestment rate averaging 5.8%. Our investment income run rate will continue to grow as we reinvest cash flow at higher rates and compound income without changing our risk profile, and then life earnings doubled to $254 million, driven by our business in Asia, which is overwhelmingly supplemental A&H. Peter will have more to say about financial items, including cats, prior period development, investment income, book value and ROE. Now turning to more color around growth, pricing and the rate environment, consolidated net written premiums for the company increased 16.1% in the quarter on a published basis, or 16.8% in constant dollars, made up of 10.5% growth in our P&C business globally and almost 130% in life premiums. Global P&C premium growth in the quarter was very well balanced and broad-based; in fact, our strongest quarter for growth since the third quarter of ’21. North America, Asia-Pac and Europe all produced double-digit growth. It’s worth noting since 2019, we’ve grown our commercial P&C business by 50%. In terms of the commercial P&C rate environment, rates and price increases in property and casualty lines were strong in the quarter in both North America and internationally, while financial lines globally continued to soften. We have been diligent about staying on top of loss costs and our positive prior year reserve development reflects a steady conservative approach to reserving. Beginning with North America, commercial premiums excluding ag were up 10.5%. P&C growth was 14% excluding financial lines, while financial lines premiums decreased, reflecting the disciplined response to the underwriting environment. Total premium in our E&S business, the Westchester, grew 12%, while our major accounts division grew 14%, or 11% excluding loss portfolio transfers. In our middle market division, premiums were up 5% with P&C growth of 9%. Our middle market workers comp book was flat and financial lines premiums in middle market declined about 1.5%. Overall pricing for total North America commercial lines increased 12.8%, including rate of 8.7% and exposure change of 3.8%. Pricing for commercial property and casualty excluding financial lines was up 17.7%. We are trending loss cost in North America at 6.7 and it varies by line. In general, we are trending loss cost in short tail classes at 5.8. In long tail, excluding comp loss costs are trending at 7.3 and our first dollar workers comp book is trending at 4.7. Let me provide a bit more color around rate and growth. Property pricing was up 31.5% with rates up 22% and exposure change of 7.8%. Major accounts and E&S property together grew premiums over 40% in the quarter, while middle market property grew 11.4%. Casualty pricing in North America was up 11.3% with rates up almost 9% and exposure up 2.2%. We grew casualty in the quarter 8%. In workers comp, which includes both primary comp and large account risk management, pricing was up just over 5% with rates up 5% and exposure up 4%. Primary workers comp premiums declined 2.9% in the quarter. For financial lines, the competitive environment remains aggressive, particularly in D&O, and rates have continued to decline. In the quarter, rates and pricing for North American financial lines in aggregate were down about 4.5%. Our fin lines book shrank 3.7%. Renewal retention for our retail commercial businesses was very strong at 98.5%. On the consumer side in North America, our high net worth personal lines business had another strong quarter with premiums up almost 11%. Our growth was balanced across a broad range of geographies and our retention was very strong at 104% on a premium basis and over 90% on an account basis. In our homeowners business, we achieved pricing of 14.7% while the homeowners loss cost trend remains steady at 10.5%. There is a lot of attention placed on consumer auto experience, so I thought I would comment briefly on it. For us, auto is a small part of our high net worth business, and you may have noticed that we had a modest reserve release in our prior year’s reserves for our North America personal lines segment in the quarter. This release was primarily in auto, and we are comfortable with our reserves and loss PICs for auto. Turning to our international general insurance operations, net premiums were up 11% in constant dollars, or 9.3% after FX. Our international commercial business grew 12%. Consumer was up 9.5%. Our international retail business grew over 10.5% while our London wholesale business grew about 14%. In our international retail business, growth was led by Asia Pacific with premiums up 17.5%, made up of commercial lines growth of over 12% and consumer P&C up more than 23%. Europe produced overall growth of 10.5% with the continent up more than 12%. We continue to achieve improved rate to exposure across international commercial portfolios. Our retail business pricing was up 8.9% with rates up 5% and exposure change of 3.7%, while loss costs across our international commercial portfolio are trending at 6.6%. Our international A&H division had another strong quarter with premiums up over 16%. In Asia, our A&H business grew 31% driven by our direct marketing and travel insurance business and the consolidation of Cigna Thailand. In the U.K. and Europe, A&H premiums were up 11.5%. In our international life business, which is almost entirely Asia, premiums tripled to over a billion dollars. Since I’m here, I want to conclude with a bit more about operations in Asia, which have very strong growth and momentum across our businesses, both consumer non-life and life, and commercial P&C. We have significant opportunity for growth, both short and long term, in a broad variety of markets across a broad range of customers and distribution channels. Our total premium in the region is about $9 billion and well balanced with half non-life split 50/50 consumer and commercial, and the other half life. Our overall presence and capabilities in north, Southeast Asia and Australia are spread across 11 markets with distinct and significant areas of growth opportunity in each. Across the region, we have a broad range of product capabilities focused on different customer segments with varied and meaningful distribution strength, including the diverse and growing list of partnerships with financial institutions and e-commerce leaders that give us access to hundreds of millions of consumers. We have strong digital capabilities and a fast-growing digital insurance business encompassing more of our products. We are the largest direct marketers of insurance, mostly A&H products to consumers in Asia through both non-life and life companies that are unifying to offer more products to more customers. From a macro perspective, the region is so dynamic and vast with a diversity of cultures and large economies, some with large young populations, some with large aging populations that have a different set of needs. Broadly speaking in Asia, there is an innovation-oriented mindset, a strong work ethic and a deep dynamism. Supply chains and capital flows are growing deeper across the region. There is growing infrastructure investment. As a result, regional commerce and trade is growing and becoming more connected between Southeast Asia, North Asia, India and Australia. There is a lot to be optimistic about. Summary - we are having an outstanding year with record quarterly and first half financial results. We are growing exposure in a thoughtful and balanced way and underwriting conditions are favorable in a lot of areas of our business. We have a lot of momentum heading into the second half, and as I look ahead, we again are confident in our ability to continue this pattern of growth in revenue and earnings and in turn drive double-digit EPS growth. I’m going to turn the call over to Peter and then we’re going to come back and take your questions.

Karen Beyer:

Thank you. At this point, we’ll be happy to take your questions.

Mike Zaremski:

Hey, great. Good morning. I guess first question would be on the--thanks for the commentary on loss trend in the commercial side. It sounded like it stayed flattish and yet the rate environment accelerated sequentially. I’m just curious, any context on why the rate environment is accelerating if loss costs are kind of staying steady - I know that’s just for you, and does your loss cost, also PIC include higher reinsurance costs, if you’re experiencing higher reinsurance costs? Thanks.

Mike Zaremski:

Okay. My one follow-up is on--you touched on catastrophe losses. They actually looked a bit lighter than at least what the consensus models for kind of a normal 2Q for Chubb, whereas some other competitors, maybe more regional based, have experienced much, much higher than, quote-unquote, normal catastrophe levels. Any commentary on your cat load this quarter, was it just--was it kind of in line with expectations?

Operator:

Your next question is from the line of Yaron Kinar with Jefferies. Your line is open.

Evan Greenberg:

The current accident year loss ratio, it reflects the totality of the commercial business, so it’s a mix of all the lines, right? Property and casualty rate and price exceed loss cost, and that is potentially a positive to the ultimate loss ratio margin. In the case of comp and financial lines, rate and price lag the selected trends, and in that case the ultimate margin is potentially shrinking or it’s neutral. Our loss PIC reflects all of that, and we’re patient and we lean towards conservatism in our loss PICs.

Evan Greenberg:

I think for the business we’ve written, yes, the rates are adequate for our portfolio, and our loss PICs reflect that. The kind of combined ratio we’re putting up has a mix of all of that in there and it speaks for itself.

Evan Greenberg:

Does that make sense to you?

Greg Peters:

Well, I think it might be close to, what, 8:30 pm your time, Evan, so I’m going to say good evening to you and your management team.

Greg Peters:

It’s almost bedtime, right? For my first question, in your prepared comments, you spoke about innovation and specifically in Asia, and there’s been a lot of rhetoric in the marketplace--you know, it’s been ongoing, but it seems to have accelerated this year around artificial intelligence, large language models, generative AI, and we obviously closely monitor your expense ratio, so maybe you could spend a minute and talk about your perspectives on these very important technology developments and how you think about it for your company, not only in North America but on a global basis.

Greg Peters:

I feel like we could probably have a long conversation on that topic. Appreciate the comments. I need to pivot as my follow-up question to the reinsurance business--

Greg Peters:

Okay, let me know when you’re available.

Greg Peters:

I don’t know if I can make it there tomorrow. Reinsurance - you know, you look at what’s going on in the market, and I know you’re very close to it, it seems like especially in property cat, it seems like these conditions, some of the hardest market conditions we’ve experienced in 20-plus years, and yet if I look at your global reinsurance business and look at the growth, it seems like you’re not really growing your exposures, you’re just growing your rate. Maybe you could provide some perspective on how you’re looking at the reinsurance business in the context--and maybe your perspective is the rate’s still inadequate, but give your perspectives on the reinsurance market. That’d be helpful.

Greg Peters:

Thanks for the answers.

Operator:

Your next question is from the line of David Motemaden with Evercore ISI. Your line is open.

David Motemaden :

Hey, good morning Evan, or good evening for you, Evan. Just wanted to ask, I guess sort of related to the last question, just about premium growth in North America commercial and the difference between the 14% growth excluding financial lines, and I think you said it was about 18% increase in price excluding financial lines. Maybe you could just talk about the drivers of that disconnect.

David Motemaden:

Yes, yes. That makes sense. I guess maybe just a quick follow-up on that, any way to size terms and condition changes versus, I guess, the premium increase change, or if I were to look at the rate increase?

David Motemaden:

Got it, okay. Yes, that makes sense. I appreciate that. That’s helpful.

David Motemaden:

Then I guess just maybe on the North America commercial current accident year loss ratio ex-cat, was there--I know the second quarter tends to be an LPT--you know, heavy LPT quarter. Was there any of that or anything else, like non-cat property losses either way within the 70 basis points year-over-year improvement?

David Motemaden:

Great, thank you.

Operator:

Your next question comes from the line of Elyse Greenspan with Wells Fargo. Your line is open.

Evan Greenberg:

Elyse, I’m feeling pretty good. I’m feeling good.

Evan Greenberg:

[Indiscernible] but you know, we’re feeling good. You saw what I said in the commentary and what I said in the press release, that we’re going to continue in this sort of pattern. I’m not putting a number on it.

Evan Greenberg:

No. We thought we were undervalued. We think we’re undervalued. We’re buyers.

Operator:

Your next question is from the line of Ryan Tunis with Autonomous Research. Your line is open.

Evan Greenberg:

Yes, as you statutorily have seen, we write a sizeable book, and I don’t know that we’ve disclosed the total global premium but what I would tell you is, is we’re one of the top--you know, I don’t have the updated numbers, so I want to be careful, but we’re in the top 3 of cyber writers, maybe the top 2 of cyber writers globally. The business is growing in certain segments for us, but the overall business is growing and the rate environment has leveled off. Terms and conditions on what we underwrite are form. We were first to--really leaders to roll out a form that addresses systemic risk to a greater degree and addresses the severity in ransomware and other one-offs. The underwriting, we’re vigilant about it. The growth, we’re growing it. The pricing, it’s pretty good in most segments. There’s some segments that need rate, and in those areas we’re leaning back a little bit. That’s what I’d tell you about cyber.

Evan Greenberg:

I think I said about 4.7%, from memory.

Evan Greenberg:

We’ve increased it in the last--earlier in the year. You know, there’s two things

Evan Greenberg:

You’re welcome.

Tracy Benguigui:

Thank you.

Tracy Benguigui:

Thanks Evan. As you sit right now in Singapore and you look at your opportunity set, how would you rank concerns of capital deployment priorities, underwriting capacity given your views of achieving rate adequacy versus acquisitions in emerging markets, could even be JVs?

Tracy Benguigui:

Okay, thanks. Yes, I wasn’t implying that you don’t have strong capital. I’ve noticed that you reported $49 million of unfavorable reserve development for molestation claims - it’s not a large number, but I’m curious what you’re seeing right now on reviver statutes. Based on the work we’ve done, are those charges reflecting the 11 states where new statute of limitation reform laws went into effect, or do the reserves also reflect the 38 states introduced new reform bills this year?

Tracy Benguigui:

Very basic question here - does statute of limitations only apply to child abuse, or is it more broad-based?

Tracy Benguigui:

Got it, thank you.

Operator:

Your next question is from the line of Brian Meredith with UBS. Your line is open.

Evan Greenberg:

You know, about 80%, 90% of the business is straight up accident and health business, the same kind of business we write on the non-life side. In the life side, you write a longer duration policy, and they’re all individual policies, so on the non-life side I may direct market the same kind of products and they’re annually renewable and they have a certain lapse rate to them, and on the life side I may sell through them agents and/or through direct marketing, and it’s dread disease and it’s hospital cash and it’s cancer and it’s accident insurance, and it will be sold predominantly--most of the book we have are individual policies and they are longer duration, which adds great stability, a long term asset. Then there is a percentage, but it’s a minority percentage of the business where it’s tied to a savings and protection policy, but yet we load it up with accident and health riders, so you’re going to buy a large amount of protection, the stuff we love, alongside a very traditional, much lower risk savings product that’s either on a par basis, where okay, any interest rate risk is fundamentally to the customer and we share the upside with them, or it’s got extremely low guarantees, like in the 1% range or 2% in a whole life policy, that’s it.

Evan Greenberg:

The overwhelming majority of this business is risk-based accident and health business.

Evan Greenberg:

Yes. It varies by state. I think it’s pretty well known to you, it’s not hidden. We are employing where we want to grow exposure and we need more flexibility of terms or of rates. We are using E&S to a greater extent as a tool to be able to take more exposure and do it in a thoughtful way and shape portfolios, and we do that both in states where exposure is concentrated in cat, and we’re also doing it in states where the regulatory environment doesn’t allow us greater flexibility to be able to actually serve the public’s need.

Evan Greenberg:

You’re welcome.

Meyer Shields:

Thanks. I want to follow up on Brian’s question, if I can. Is there a specific opportunity for Chubb’s growth in North America personal because of regulatory friction that is leading a number of competitors to really pull back?

Meyer Shields:

Okay, that’s helpful. Then just a brief question, I think I know the answer to this, but does the consolidation of Huatai impact the book value yield of the Chubb investment portfolio at all?

Meyer Shields:

Okay, perfect. Thanks so much.

Alex Scott:

Hey. First one I had is on casualty in North America - you know, you all have been fairly vocal about the need for accelerating rate there. I just wanted to get your updated thoughts on is that occurring at the rate you think you need it to for the industry to have adequate pricing, and what kind of competitive environment are you seeing there on casualty lines in North America?

Alex Scott:

Got it. The second question I had is around the casualty reserves - I’m sure you’ve seen there’s a fair amount of chatter around the 2013 to 2019 accident years and people looking at the loss cost trend on longer tail lines and thinking through, you know, should we be confident in those reserves. I appreciate this is probably a bit of an annoying question, but is there anything you would add to that discussion to help people think through your confidence in those reserves, just in light of the environment?

Alex Scott:

Thanks.

Operator:

At this time, I would like to turn today’s call back over to Karen Beyer.

Operator:

Ladies and gentlemen, thank you for participating. This concludes today’s conference call. You may now disconnect.

Operator:

Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Chubb Limited First Quarter 2023 Earnings Conference Call. [Operator Instructions] Thank you. It is now my pleasure to turn today's call over to Ms. Karen Beyer, Director of Investor Relations. Please go ahead.

Evan Greenberg:

Good morning. We had an excellent start to the year, highlighted by double-digit operating earnings growth that led to record results. We had double-digit premium revenue growth that was global, broad-based and driven by strong results in our commercial and consumer P&C businesses and our International Life business. World-class underwriting results with an 86.3% combined ratio, record net investment income and life income that more than doubled. North America P&C rate and price increases reaccelerated in the quarter, it was an word standout performance that I expect will continue. We grew operating income almost 12% to $1.8 billion, and that drove a 15% increase to $4.41 per share, both records. In context, of what was an active CAT quarter, our published combined ratio reflects simply outstanding underwriting performance from our P&C businesses. The 83.4% ex-cat current accident year combined ratio was a record. On the Investment income side, record adjusted net investment income of $1.2 billion was up over 30%. Our portfolio yield is now 3.8% versus 3% a year ago, with our reinvestment rate averaging 5.5%. Our investment income run rate will continue to grow as we reinvest cash flow at higher rates. Life Insurance premium revenue more than doubled, while Life earnings doubled to $244 million, driven by our business in Asia and predominantly the addition of the Cigna operations which are mostly A&H and product makeup. In this time of economic and financial market volatility and uncertainty, Chubb is a safe haven. Our business model and the fundamentals of our business are very strong and broad-based. Our earnings and revenue are growing. We have an exceptionally strong capital position and a conservative level of leverage and our operating cash flow of $11 billion in '22 and over $2.25 billion this quarter speaks to our strong liquidity. Our unrealized loss as a percentage of tangible equity is 17% and will amortize back to par over a short period. Rising interest rates of our brand and most important, as you know, you can have a run on the bank in our business. So again, this speaks to an attractive profile that distinguishes Chubb. Peter is going to have more to say about financial items, including cats, prior period development, investment income, book value and a rising ROE. Now turning to growth and the pricing and rate environment. Consolidated net written premiums for the company increased over 16.5% in the quarter on a published basis or over 18% in constant dollars, comprised of 11% growth in our P&C business globally and 129% growth in life premiums. P&C premium growth in the quarter was balanced and broad-based. North America, Europe and Asia, all produced double-digit growth. Beginning with North America, commercial premiums were up almost 12% or 6.2% excluding Agriculture. Adjusted for the impact of one-off loss portfolio transfers in our major accounts division, year-over-year North America regular commercial flow grew 7.6%, which is representative of the minimum rate growth we expect for the balance of the year. And by the way, the 7.6% is broken down as 10% growth in P&C and minus 2% growth in financial lines. Our major accounts and specialty division grew 6.3% or 8.7% adjusted for the LPTs. And that was 11.4% P&C and minus 7% financial lines. In our middle market and small commercial business, premiums were up 6.5% or 7% in P&C and up 2% in financial lines. Renewal retention for our retail commercial businesses was 97%. On the consumer side in North America, our high net worth personal lines business was up almost 10%, an exceptionally strong result. And in fact, the strongest organic growth in over 15 years. Turning to our International General Insurance operations, net premiums were up 10% in constant dollars or 6% after FX impact with commercial up 10.8% and consumer up over 8.5%. Growth was led by our Asia Pacific region with premiums up over 18.5%. And with commercial lines up about 15% and consumer lines up over 22%. And Europe produced overall growth of over 10%. In terms of the Commercial P&C rate environment, rate and price increases reaccelerated. Pricing for total North America Commercial P&C, which includes rate of 6.4% and exposure change of 4.5% increased 11.2% against a loss cost trend of 6.7%. Pricing for commercial property and casualty, excluding financial lines and workers' comp was up 16.9%. Property pricing was up 27%, with rates up 16.4% and exposure change of 9.1%. Casualty pricing was up 9.9%, which includes 7.4% of rate and 2.3% of exposure. As I said last quarter, for professional lines and workers' comp, which includes risk management, the competitive environment is aggressive and rates have continued to decline in recognition of favorable experience. In the quarter, rates and pricing for North America, financial lines and aggregate were down about 2% and in workers' comp, which includes both primary comp and risk management, pricing was up 6.4%, with rates down 0.5% and exposure up about 6.8%. Internationally, we continued to achieve improved rate to exposure across our commercial portfolio. In our international retail business, pricing was up about 8%, with rates up 4.8%, and exposure change of about 2.9%. While loss costs across our international commercial portfolio, or trending at 6.5%. Turning to our Consumer businesses. In North America, high net worth personal lines business, again, net written premiums were up almost 10%. With our true high net worth client segment, up over 15%. Retentions were 104% on a premium basis and about 91% or on an account basis. We continue to benefit from a flight to quality and capacity. In our homeowners business, we achieved pricing of about 13%, while the homeowners loss cost trend is running about 10.5%. International consumer lines premiums again grew over 8.5% in the quarter in constant dollars. Our international A&H division had another strong quarter, with premiums up about 20%. Asia Pacific was up 34.5% while the U.K. was up over 12%. Premiums in our international personal lines business were down 1.5 points, and it was impacted by our business in Europe. In our International Life Insurance business, again, premiums and income overall more than doubled. Our business in Korea and the majority of Asia is off to a good start to the year. I was just in Korea two weeks ago, our leadership, the franchise, the strategy, the execution and the growth are all in really good shape. And this is a very large business for Chubb. In summary, we had an excellent quarter and have had a strong start to the year with a lot of momentum heading into the second quarter. Looking forward, we are confident in our ability to continue growing revenue and operating earnings, which in turn drive EPS through the three engines of P&C underwriting income, investment income and life income. Add to that our business model, financial strength, stability and liquidity, and I believe you have in Chubb, both the reassurance of safety, and the attractive prospects of a long-term growth company. I'll turn the call over to Peter, and then we're going to come back and take your questions.

Karen Beyer:

Thank you. At this point, we're happy to take your questions.

Evan Greenberg:

Good morning, David.

Evan Greenberg:

Yes. No. David, as you know, we don't give forward guidance really. And I gave you a little flash, but I'm not going to go further than that. I was pretty clear, I expect the trend you see in pricing, and I expect the trend you see in sort of pattern and growth to continue. And you got a sense of P&C lines growing and you got a sense of professional or financial lines. And beyond that, it's not simply about North America and look at the company globally, and frankly, look at the International P&C and I expect the pattern to continue, look at consumer lines, and I expect the pattern to continue. Look at life, and I expect the pattern to continue. Investment income, and I expect the pattern to continue.

Evan Greenberg:

Yes. And I talked about this, you're right in the letter and on previous calls, and that is like so many businesses. If you take a bigger picture view of it, insurance and among other financial companies and nonfinancial, we're coming out of a -- and have come out of a period of very low inflation. Zero cost of money fundamentally are overwhelmed by liquidity. And in the low inflation environment, you don't have to be necessarily as insightful on loss cost any -- at a particular moment in time, lag has less of an impact on you. You have to watch it very carefully, and we always -- but the time element of date of when of data when you get it, you could be a little more relaxed. It's a quarter old -- two quarters old, less important. In an inflationary environment, which we experienced and began while ago, that's a killer. And for those of us who've experienced inflation at time values can mean everything in accuracy. And that's where we really immediately when we saw it jumped on it and measured that time lag in data, which you have to get to the source of input when you're looking at inflation, whether it's on the physical side of when a repair is actually occurring to an automobile or a home or it's on the liability side very quickly in the development of that. You have to be on top of the trend and you really have to unpack severity from frequency and then you had the impact of COVID on frequency. So -- and then you add to that the tools we have available terms of external data and the use of it and our ability to manipulate and use data internal and external more insightfully and more quickly. You add the capabilities and analytics of this organization with claims and actuarial and underwriting together, and I think it's a competitive weapon and advantage particularly the speed at which we can react. And I think any modern financial organization that distinguishes itself. That's part of the action.

Evan Greenberg:

You're welcome.

Mike Zaremski:

Good morning. First question on reinsurance costs. Any -- given industries experiencing higher reinsurance costs, both on property and on the casualty side and maybe that's not the case for Chubb. Feel free to correct me. Is Chubb contemplating any changes in its strategy, maybe retentions? Or is this still TBD as things progress?

Mike Zaremski:

Got it. Follow up on market conditions. You gave us a lot of good color. If we -- the acceleration in pure rate accelerated a lot more than I think there might have been a tad bit of a loss cost pickup just on the North America commercial side. But maybe you can kind of lend some more color on, do you feel the markets being more rational in terms of kind of adjusting to loss cost trends and also higher reinsurance pricing? And it sounded like you were optimistic that things have -- competitive conditions have gotten a little bit better quarter-over-quarter. Thanks.

Mike Zaremski:

Thank you.

Yaron Kinar:

Thank you. Good morning. My first question, I guess more specifically to North America commercial. Do you see the overall book --

Yaron Kinar:

Well, I could do that, but I'm not sure we have enough time. With North America commercial, do you see the book overall as rate adequate today?

Yaron Kinar:

You do. So with that in mind, I guess, why would we not see more acceleration of premiums given that rates are adequate and picking up, why wouldn't you lean into that a little more with greater exposure?

Yaron Kinar:

Okay. And then my other question was on the G&A expense side. Seem to be a modest pickup in North America, both personal and commercial. Are there any specific platform investments you can call out? Or is it just wage inflation hiring?

Yaron Kinar:

Got it. So is that a reasonable run rate to think of for the rest of the year?

Peter Enns:

I think the pension will be consistent each quarter. And then there's other stuff around it.

Peter Enns:

For this year.

Peter Enns:

You're welcome.

Greg Peters:

Excellent. Good morning, everyone. Evan, in your prepared comments, I think you mentioned a recent trip to Korea. You talked about the Life results. Maybe you can give us an update on the Cigna acquisition, how the integration is proceeding and if there's any update on sort of ROE targets related to Cigna now that it's in the Chubb family?

Greg Peters:

Yes, the Europe numbers are kind of surprising against the backdrop of the macros news that we read about here and there. I spent some time during the discussion talking about all the data resources, the analytics you have. And one of the topics that's become more popular and more recent is this ChatGPT. So maybe you can segue and talk about how you're deploying AI across your organization and the opportunity you have to drive further efficiencies as you utilize these types of tools?

Greg Peters:

Great. Thank you for the answers.

Operator:

Your next question is from the line of Elyse Greenspan with Wells Fargo. Your line is open.

Evan Greenberg:

Yes. No, you're correct. We're -- we got a finite balance sheet. We can't take infinite amount of risk. And we like the risk reward and the total opportunity. On the primary side, we're much more biased on the primary side than we are on the cat REIT side. And so that is correct. So our cat REIT and CAD and property excess and property quota share business. So not just straight cat REIT. Those are areas where we're taking more exposure. But -- you're right, overwhelmingly, when we look at the market and the risk reward, we're more primary oriented.

Peter Enns:

Yes. We typically don't -- we have not disclosed Huatai's earnings specifically. We'll have more comments after it closes and we consolidate it. And what I've said historically is it won't have a material impact on a net basis to us in terms of earnings.

Elyse Greenspan:

Okay. Thank you.

Tracy Benguigui:

Good morning. A quick question. Do you manage your business more on net growth than growth? Or is that vice versa? I'm just thinking about capital consumption, if you're retaining more, could that dampen how much you want to grow growth premium?

Tracy Benguigui:

Okay. So I just wanted to make sure that I understood prior comments correctly. So the 4% growth in gross premium written we saw in North America commercial lines, which was lower than we've seen in prior quarters, that had to do more with business?

Tracy Benguigui:

Got it. I am also curious to...

Tracy Benguigui:

Got it. I'm also curious, did you increase your loss picks from banking D&O claims activity this quarter? I noticed that your North America commercial lines underlying loss ratio improved both sequentially and year-over-year. So I'm wondering if that improvement would be in spite of any raise and off-peak?

Tracy Benguigui:

Thank you.

Operator:

Your next question is from the line of Alex Scott with Goldman Sachs. Your line is open.

Evan Greenberg:

Look frequency of loss and casualty is just has been on March where it's rising and reverting to the mean of pre-COVID. It varies by line of business in some lines of business, the frequency of loss is still below pre-COVID and some others, it has reverted to pre-COVID trend. So it varies. And -- but overall, frequency has been increasing, and that's a proxy that -- and that's been going for a while. So that's a little bit of yesterday's news that the courts -- they've been reopened over a year or so. There you go. And the lawyers are all active.

Peter Enns:

Alex, the way I would think about it is, and you pointed out between Cigna coming online purchase gap and LDTI, there's been movement in the numbers. The first quarter of this year, things are settling and we think are representative of a run rate going forward.

Evan Greenberg:

You're welcome.

Brian Meredith:

Thanks. Can I just quickly clarify something. I get a bunch of questions on it. The 7.6% growth rate that you mentioned, that's premium growth for the remainder of your minimum premium growth you expect for the remainder of the year. Is that correct in North America commercial?

Brian Meredith:

Yes, makes sense. So it's premium growth, great.

Brian Meredith:

That's what I thought. That's what I thought. I just wanted to clarify. Sorry, I was going to get a bunch of questions on it. The second question, I'm just curious, I'm trying to kind of do some mental math here on this, and that can be dangerous, but looking at your 11% and change pricing in North America commercial versus the 7.6% premium growth, was there something going on with mix or something would cause pricing to be greater than the premium growth?

Brian Meredith:

So is it a mix issue or something going on?

Brian Meredith:

That's really, really helpful. And then can I just one follow-up. Cyber market. Can you just tell us kind of what your thoughts are there now in the cyber market. Is that an attractive market at this point from a pricing and what's happened with term condition in the last couple of years?

Brian Meredith:

Thank you.

Operator:

Your next question is from the line of Ryan Tunis with Autonomous Research. Your line is open.

Evan Greenberg:

Yes. First, I want to take a step back on that and say, Asia is on my mind. It's not simply the life business. Half of the business is P&C, that is robust. Asia itself, I don't hold me in the number. I have it in my head, but it's roughly a $10 billion region for us. Important, it's massive, region and scale. It's the greatest -- it has the greatest growth potential economically. I think, of any region in the world over the next decade, two decades. So it has a volatility to it, naturally. India, China, Southeast Asia, the dynamism of developed Asia, Korea, Japan. It's just -- it's massive. Australia is part of Asia to us, back to the Australians. And it's non-life and life. And I look at it as one organization, it's Chubb. The way they work together is awesome. We began our life business about a decade -- I began it over a decade ago. I mean, heck, I was pounding on the door of Vietnam to get one of the few life licenses they gave out in 2002. 2003, I was banging on that door. And we've been at it since growing organically and then through acquisition and the Cigna just turbocharged it. At the same time in our non-life business. We are growing from dust and A&H business that could have been incubated in a life company or a nonlife company. Cigna's to a large degree A&H business. Our Life business is a combination of agency distribution on direct marketing and the direct marketing is non-life and life. And the life products themselves are much more back to the future. It's because Asia is different and their traditional life products that have much better ROE characteristics to them. They have very low guarantees. They have traditional savings. They have a lot of risk element to them that we like, A&H, in particular, whether it's dread disease or hospital cash. Very limited basic medical. The customer buys along with savings and savings rates are high in Asia. You have a very young population. The youngest in the world and a growing labor force. And it's combined with a very family-oriented culture and ethic and that drives long-term savings. And you have low social safety net. And so private insurance means more. That all plays to life and to non-life. And frankly, operating my office from there and I'm going to be out of both Hong Kong and Singapore is simply there is such opportunity, and I travel back and forth have for decades a few times a year, but this is just to be more insightful and deeper about it in terms of strategy as we go forward. And my colleagues, many of them will do the same -- global company.

Peter Enns:

Very -- it was minor in terms of its impact that the loss ratio down expense ratio up. That's what happens with it. But very, very minor. You can measure it at 10%.

Operator:

At this time, I would like to turn the call back over to Ms. Karen Beyer.

Operator:

Ladies and gentlemen, thank you for participating. This concludes today's conference call. You may now disconnect.

Operator:

Good morning. My name is Rob and I will be your conference operator today. At this time, I’d like to welcome everyone to the Chubb Fourth Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Karen Beyer, Senior Vice President of Investor Relations, you may begin your conference.

Evan Greenberg:

Good morning. We had a strong finish, which contributed to another record year. Our quarterly underwriting results were excellent, with an 88% combined ratio despite a true-up to the projected ‘22 crop insurance full year results. We had good growth in net investment income that led to a record result and double-digit premium growth with strong contributions from our commercial and consumer P&C lines globally and our international life business. More important, the quarterly results led to what was the best full year financial performance in our company’s history, including record operating income on both a per share and dollar basis from record P&C underwriting and investment income and another year of double-digit premium revenue growth, including the best organic growth in our international P&C business in a decade. All areas of the company contributed to the outstanding results last year. And I want to congratulate and thank so many of my colleagues around the globe. Core operating income in the quarter was $1.7 billion or $4.05 per share. Crop results reduced our expected agriculture earnings by $0.39 per share. For the year, we produced core operating income of $6.5 billion or $15.24 per share, up 21% and again, a record. Quarterly P&C underwriting income of $1.1 billion was impacted, as I said, by an underwriting loss from crop as we trued up our projection for the ‘22 crop year. This change of view for the full year result was due to the late season emergence of losses from drought conditions in certain corn belt states, which overshadowed average to excellent growing conditions in many other areas, leading to what we now know is a below-average year overall for that business. Agriculture is a weather exposed business with nat cat like characteristics. It’s about growing conditions and commodity prices. And each year, you start over. For the year, we performed well, all considered. We published a 94.2% combined ratio and produced $165 million in agriculture underwriting income. Back on the quarter, excluding agriculture, the combined ratio was 85.9% and speaks to the strong broad-based underlying performance of our business, which produced an amazing 82.9% ex-cat current accident year combined ratio. Full year P&C underwriting income was a record $4.6 billion, up 23%, with a published combined ratio of 87.6% and that’s with $2.2 billion of catastrophe losses in what was one of the costliest years yet for the industry in terms of cats. On the investment side, adjusted net investment income topped $1.1 billion for the quarter, up about $215 million from prior year and $4 billion for the year, both records. Our reinvestment rate is now averaging 5.6% against a portfolio yield of 3.6% and that’s translating into annualized run-rate growth, simply going into the first quarter of 13%, which will continue to grow as we reinvest cash flow at higher rates. Our operating cash flow for the quarter and year was $2.7 billion and $11.2 billion respectively. For perspective, I want to touch on capital management. As you know, our policy is to maintain, is to manage for capital flexibility. After all, we are a balance sheet business in the risk business and we are a growth company. We maintain flexibility for risk and opportunity and return the balance to shareholders simple and consistent policy. The last 2 years are instructive. We have organically grown our P&C premiums 21.5% and that requires capital. We have deployed $5.4 billion for the Cigna acquisition and invested a further $1.4 billion and increasing our Huatai ownership together key strategic acquisitions with an emphasis on Asia. And at the same time, we have returned over $10.5 billion of total capital to shareholders through buybacks, over 9% of outstanding shares and dividends all the while maintaining capital adequacy for risk and future opportunity and we have capital flexibility given our strong earnings generation power. Peter will have more to say about financial items, including cats, prior period development, investment income, book value and ROE. Now turning to growth in the rate environment, consolidated net written premiums for the company increased nearly 12% in the quarter on a published basis or 16% in constant dollars to $10.2 billion. This includes growth of 9.8% in our P&C business and over 100% of growth in life premiums, reflecting the addition of the Cigna Asia business. P&C premium growth in earnings in the quarter were balanced and broad-based with contributions from virtually all commercial and most consumer businesses globally. Agriculture aside, North America commercial premiums were up almost 9%, while our high net worth personal lines business was up 6%, a very strong result. Overseas general grew 9.7% in constant dollars, but declined 1.3% after FX, with commercial up 9.4% and consumer up 10.3%. We are a major multinational company and are impacted by currency movements. After reaching a 20-year high in September, the dollar has been weakening and that will benefit our growth in the future. In North America, growth this quarter in Commercial Lines was led by our major accounts and specialty division, which grew 9.1%, followed by our middle-market and small commercial business, which grew 8.7% and renewal retention for our retail commercial businesses, was over 96%. In our international general insurance operations, retail commercial P&C grew 9% in constant dollar, while our London wholesale business grew about 7.5%. Retail commercial growth was led by Latin America, with premiums up nearly 13%, followed by growth of 8.5% in Asia-Pac and 6.5% in our UK, Ireland division. In terms of the commercial P&C rate environment, pricing conditions remain favorable for most lines of business. The vast majority of our portfolio is achieving favorable risk-adjusted returns. So like I said last quarter, in most lines, additional rate is required primarily to keep pace with loss costs, which again are hardly benign in both long-tail and short-tail lines. To illustrate, in the quarter, pricing for total North America Commercial P&C which includes both rate and the portion of exposure that supports rate increased 6.5%, with loss costs up 6.5% as well. Now that’s the headline. And let’s drill down further, because I think it’s more insightful. Pricing for commercial P&C, excluding financial lines and workers’ comp was up 10%, with loss costs trending 6.9%. Breaking P&C down a step further, property pricing is firming in response to catastrophe exposures, inflation, reinsurance pricing and availability. Short-tail pricing was up 14.7%, while loss costs were up 6.8%. Property insurance is an opportunity for us. For the majority of casualty lines, pricing is adequate. In the quarter, pricing for North America Casualty was up 7.5%, while loss cost trends were 6.9%. Now given casualty loss cost trends, rates in most classes need to rise at an accelerated pace. There is little to no room for forgiveness. And here a special mention to excess casualty and auto-related liability is warranted. For Chubb, our minds are clear, and our playbook is consistent. In some lines like professional liability and workers’ comp, which includes risk management, the competitive environment is quite aggressive and rates have been falling for a number of quarters now in recognition of favorable pricing and favorable experience. However, if not careful, the market is in danger of overshooting the mark. In the quarter, rates and pricing for North America financial lines in aggregate were essentially flat. They were up 0.2%, while loss cost trends were up 5%. And in workers’ comp, which includes both primary comp and risk management, pricing was up 2.3% against a loss cost trend of 5.5%. Internationally, we continued to achieve improved rate to exposure across our commercial portfolio. In our international retail business, pricing was up about 9.5%. Rates varied by class and by region as well as country within region and loss costs are trending 6.2%. Turning to our consumer businesses, in our North America high net worth personal lines business, again, net written premiums were up about 6%. Our true high net worth client segment, however, grew 12.5%. There is a flight to quality and capacity. In our homeowners business, we achieved pricing of about 12.5%, while the homeowners’ loss cost trend is running about 10.5%. International consumer lines premiums grew over 10% in the quarter, again, in constant dollar. Our International A&H division had another strong quarter, with premiums up about 21%. Asia-Pac was up nearly 40%, with half of the growth coming from the Cigna acquisition, while Latin America and the UK each were up about 13.5%. Premiums in our international personal lines business were up less than 1% in constant dollar. In our international life insurance business, premiums doubled in constant dollar while life income overall was also up over 100%, both positively impacted by the addition of the Cigna Asia business, which is on track. As we enter ‘23, while early days, growth in our Asia consumer business including non-life, life and A&H is widespread and strong, a combination of a strong external environment and our capabilities and presence. Consumer lending, increasing foot traffic across retail and banking operations and the resurgence of leisure and business travel are all contributing to strong growth. Leisure travel alone was up nearly 400% over prior year. And as China reopens from its strict pandemic controls, it will further stimulate growth in the region. Think trade, which benefits commercial lines and business travel and think tourist travel as the Chinese begin to travel again on holiday. As regards China, as you know, last quarter, we have received regulatory approval to increase our ownership in Huatai Insurance Group, to 83.2%. Since then, the transfer of shares from a number of separate shareholders has taken place and we have increased our ownership to 64%. The remaining 19% is expected to close in the next weeks or months. In summary, we had an outstanding year. And looking ahead, we are starting off on a strong foot in the first quarter overall. Conditions remain favorable in terms of continued growth for our businesses globally and then add the strong trajectory of growth from investment income. Despite the challenging macro environment, I am quite optimistic about our future and confident in our ability to outperform. I will now turn the call over to Peter and then we are going to come back and we are going to take your questions.

Karen Beyer:

Thank you. And at this point, we’re happy to take your questions.

David Motemaden:

Hi, good morning. Thanks for the detail on the rate by line of business and loss trend by line. I thought that was helpful. I’m interested in the casualty market where it sounds like price is still above loss trend. Hearing again the need for additional rate here. I’m wondering if you’re seeing what the market’s discipline is in terms of getting that additional rate? Or if competition is picking up here at all, interest rates are higher. We’re obviously seeing some competition picking up in professional liability. So just wondering what you’re seeing in North America casualty.

David Motemaden:

Right. Okay. That’s helpful. I appreciate that answer. And then just following up, maybe a question for Peter, could you talk about the drivers of prior period development in North America commercial between short tail and long tail lines?

David Motemaden:

Great. Thank you.

David Motemaden:

Okay, great. Thank you.

Evan Greenberg:

Good morning, Elyse.

Evan Greenberg:

Yes. Elyse, just so you know, you’re breaking up a little bit. I think I got it, but you’re just be aware that it’s hard. You’re not coming through really clearly. I think you were talking about property cat and whether we see it as an opportunity. Look, we have a very clear mind about our standards, adjusted returns we would expect to see in property cat to increase our exposure. And we’re in the middle of the market. And so I’m not going to comment any further than that, except that if the conditions are right, from – in both terms and in pricing, then Chubb is a risk taker in property cat. We will increase. However, it’s not a business we need to chase by any means. And so we will only deploy additional capital to take more exposure if we like the trade. Beyond that, I know you want to know specifics and I’m hardly going to look forward and talk about it while we’re on the field of play. You’ll see the footprints after the fact.

Evan Greenberg:

Elyse, I think if you listened to my commentary, I just said that. When I talked about the 14.8%, I believe it was increase in pricing. I mentioned the cat environment, I mentioned availability, I mentioned reinsurance availability and reinsurance pricing.

Evan Greenberg:

I think I already made my comment about that property is an opportunity for Chubb is what I said only 10 minutes ago. I can’t stand on it any further than that.

Evan Greenberg:

Thanks.

Paul Newsome:

Good morning. Thanks for the call rest of the year. I was hoping you could give us a little bit of additional color on what we’ve seen at Chubb from exposure changes over the last, say, couple of quarters, is that we move into 2023. And there are some folks including our strategists, that thinks we’re going to be in a recession sometime this year. I was wondering if – so what are the sensitivities among your books, what parts of your business would we see if it happens in the future and what parts would be less sensitive to assessments and exposure changes?

Paul Newsome:

Then maybe as well, can you talk a little bit about the ability of both Chubb and the industry to pass on higher reinsurance costs to sort of primary commercial lines. Things have changed a little bit, I think, structurally over the years. And I think I’m not sure what the sensitivity is today in terms of how quickly the primaries lines will respond to higher reinsurance costs in today’s environment. But any thoughts there would be great, I think just to help us out?

Paul Newsome:

Thanks a lot. And I will appreciate. That will help as always.

Operator:

Your next question comes from the line of Greg Peters from Raymond James. Your line is open.

Greg Peters:

Good morning, everyone. So obviously, you commented this on your comments. So just letting you know I heard your comments, but I’m looking for further clarification.

Greg Peters:

Well, you didn’t say much about this. So hopefully, I can get a little more out of view. But I was I intrigued by your comment about the retention in commercial at 96%. And maybe you could give us some historical context and then more importantly, you talk about the moving pieces of the market, financial lines, workers’ comp? Do you have a view of how that might trend over the near-term? Are you willing to share with us should add?

Greg Peters:

Yes, that makes sense. Another area that Peter commented on, it seems kind of important. And I am going to have to review the comments in the transcript. But Peter, maybe you can go back. The gives and takes out of the life insurance, you talked about assimilating the accounting and then you talked about some other headwinds that happened in the fourth quarter. Can you go through that and maybe give us a little additional color on that?

Evan Greenberg:

So, in our minds, that’s like that brings you to about $175 million.

Greg Peters:

Okay. Got it.

Greg Peters:

Got it. Thanks for the answers.

Tracy Benguigui:

Thank you. Good morning. I would like to go back to the discussion on casualty. I fully understand that rate needs to increase to keep up with loss cost trends. But there are things you could do on the structural side, are you making any meaningful changes in attachment points or deductible? One of your competitors mentioned an inflation is causing more losses to creep into the excess layer?

Tracy Benguigui:

Okay, got it. And we actually got more color from you on loss cost trends by business line this quarter. And you mentioned just sticking with North American casualty that loss costs were 6.9%. Can you give context how that’s trended versus prior quarters? And if you could also see….

Tracy Benguigui:

Stable, okay. And if you could tease out if this is a level you are observing right now, are you using a higher projected loss trend when you think about risk-adjusted returns?

Tracy Benguigui:

Got it. Thank you.

Operator:

Your next question comes from the line of Brian Meredith from UBS. Your line is open.

Evan Greenberg:

I think you – I mean look at it by ratios, Brian. I think they are just stellar. They are world-class returns and I am very happy with the returns in our portfolio. And as far as whether they would get any better, well, stay tuned.

Evan Greenberg:

You know, I don’t give forward guidance…

Evan Greenberg:

I know you guy. I love you dearly. It’s a good try.

Evan Greenberg:

No. And that’s why I really did want to take time and step back and we all look at perspective together of our capital management policy and how it translated to numbers. And I mean it’s a stunning amount of capital that we have used. I mean it speaks to our stewardship of capital and our earning power over the couple of years. And I wanted to create that context and perspective, nothing has changed at all in how we manage, think about managing capital and buybacks is just one dimension of that as you know. And we have a buyback authorization. And we have a bunch remaining within that. And we say that as we do, when you read it, that we will repurchase up to that amount. And we are just steady as she goes. Nothing has changed about how we view it.

Brian Meredith:

Got it. Thank you.

Alex Scott:

Hey. Good morning. First one I had is actually a follow-up on the last question. On the capital front, when you think through how strong the margins are, as you pointed out, and price adequacy across a lot of your business in a pretty strong place balanced with some of the comments you are making about the forward-looking casualty markets and so forth. How does that make you feel about your capital and your willingness to deploy into organic business at the moment, when we think about strong starting point, and the comments you have made about the next year in casualty potentially?

Alex Scott:

Understood. Second question was also a growth question, but on the life insurance business. Just wanted to see if you could help us think through now that you have completed the Cigna acquisition and you get into some of the integration and so forth, what does that look like and thinking out over the next year or 2 years in terms of being a growth engine for the company?

Alex Scott:

Got it. Very helpful. Thank you.

Operator:

Your next question comes from the line of Mike Zaremski from BMO. Your line is open.

Evan Greenberg:

Well, I think it tells you a few things. We have grown our exposure a lot. And your first incurred losses and we are in a fast, we have been in a faster growth trajectory. So, when you conceptualize, we have grown more quickly exposure, incurred losses come and grow at a certain pace before the paids come through. So, on one hand, you have that. And then on the other hand, you have the strength and maybe it speaks ultimately to the strength of our reserves. And let’s just wait and see over time. It’s nothing, but good news.

Evan Greenberg:

I will try to have M&A on the table. No, there is no M&A. I am looking at a table that is empty at the moment. It’s organic growth and we are endeavoring along and it is very digital and modern centric. And in concert with our middle market and lower middle market business. And the two of those, while the small commercial itself gets modernized into a digital enterprise, it is a consistent and very intense strategy in terms of management focus, resource and attention. I am looking at John Lupica, I am looking at John Keogh and we have the most senior executives with their eyes and Julie Dillman, who runs all of our IT and Ops and drives our transformation. From that end, we have got so much executive talent just focused and committed that this is an important future business to Chubb. And it is just – it’s consistent and it’s – you grind it out, yard-by-yard.

Operator:

And there are no further questions at this time. Ms. Karen Beyer, I will turn the call back over to you for some closing remarks.

Operator:

This concludes today’s conference call. Thank you for your participation. You may now disconnect.

Operator:

Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the Chubb Third Quarter 2022 Earnings Conference Call. 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. [Operator Instructions] Thank you. It’s now my pleasure to turn today’s call over Ms. Karen Beyer, Senior Vice President of Investor Relations. Please go ahead.

Evan Greenberg:

Good morning. As you saw from the numbers, we had an excellent quarter in spite of cat losses with terrific underwriting results, including outstanding combined ratios, record net investment income, double-digit constant dollar P&C premium growth, well-balanced between commercial and consumer. And finally, surging Life division revenue growth with the addition of Cigna's Asia business. Commercial P&C pricing was strong and exceeded loss costs in aggregate and in most individual lines of business. Core operating income in the quarter was $1.3 billion, or $3.17 per share, up 20% over prior. In the quarter, we produced $710 million of underwriting income, up 15% with a published combined ratio of 93.1%, pre-tax catastrophe losses were $1.2 billion, of which $975 million was Ian. For the year, record underwriting income of $3.4 billion was up more than 40% or $1 billion leading to an 87.5% combined ratio, an improvement of nearly three points over prior year. Underpinning the published combined ratio was the ex-cat current accident year combined ratio, which was 84% for the quarter, adding to a record 837 for the year, simply stunning. Hurricane Ian was a large event distinguished by its size, wind speed and amount of water, both surge and flood. The models we use contemplate a cat three or greater event striking Florida about every three years. We are fully prepared to take cat risk and the associated volatility. After all, it's what we do for a living. As long as we are adequately compensated and the concentration of exposure is within our balance sheet wherewithal. In my judgment, current pricing for cat is inadequate in many portfolios, and property pricing should continue to adjust to the realities of the nat-cat [ph] environment, as well as the increased cost for reinsurance protection and potential lack of availability. Returning to the quarter. Investment income was a record $1.1 billion, up over 12% from prior year, topping $1 billion for the first time. As I noted in our recent calls, with rising interest rates and widening spreads, investment income is and will continue to rise. Our reinvestment rate is now averaging 5.8% against a portfolio yield of 3.4%. During the quarter, we continued to accelerate the turnover of our portfolio in a targeted way, so that we could put cash to work more quickly at higher yields. Investment income will make up a growing percentage of our company's earnings, as we look forward. Obviously, rising rates have produced a sizable negative mark on our invested asset. But as a reminder, we were a buy and hold fixed income investor and the market is transitory. To put a point on that, our portfolio credit quality is high, and we expect about half of the mark will accrete back to book value over about a two-year period. As you saw, the addition of Cigna's business in Asia, which we closed in the quarter is making an immediate contribution to revenue and earnings in line with what we expected. It is accretive to our consolidated results, including operating income and ROE. Peter will provide more information around the financial items. Turning to growth and the rate environment. Total P&C net written premiums globally increased 8.5% in the quarter on a published basis, or 11.2% in constant dollar, with commercial up 11.7% and consumer up over 9.5%. Consolidated net premiums for the company, which include our Life Insurance segment, increased 17.3% in constant dollars, reflecting the consolidation of the Cigna Asia business. P&C premium growth in earnings in the quarter were again balanced and broad-based, with contributions from virtually all our commercial businesses globally. Total North America premiums were up over 10.5% with commercial up 11.4% or 8.1% excluding agriculture and our high net worth personal lines business, up over 7% in the quarter. Overseas General grew 11.7% in constant dollars, but only 2% after FX, with commercial up 11% and consumer up 12.7%. With the strongest US dollar in 20 years, the negative impact of FX masks the real strength of our business. Agriculture premiums were up nearly 22% in the quarter, driven overwhelmingly by crop insurance growth, as a result of commodity price increases and market share gains, we produced near record underwriting income off the back of what we project to be a decent growing season. In terms of the commercial P&C rate environment, market conditions remain quite favorable for most lines of business. The vast majority of our portfolio is achieving favorable risk-adjusted returns. So additional rate is required, primarily to keep pace with loss cost which, as I have been saying, are hardly benign in both long-tail and short-tail lines. The market is reasonably disciplined. But given loss cost inflation, and what will be slowing growth and exposure in the future given economic conditions, casualty rates in most classes will need to rise at an accelerated rate or else the industry will fail to keep pace. In North America, growth this quarter in Commercial Lines was led by our Major Accounts and Specialty division, which grew 9.7%, followed by our Middle Market and Small Commercial business, which grew 5.7% and our Middle Market division, P&C lines grew almost 9%, while Financial Lines declined about 5.5%, primarily due to a lack of IPOs, M&A activity and new business. Renewal retention for our Retail Commercial business was virtually 100% on a premium basis. Overall rates in North America Commercial Lines, excluding comp, were up 5%, while total pricing, which includes rate and exposure increased 8.5%. We are staying on top of inflation in terms of pricing and reserving. In North America Commercial Lines, we assume loss cost trends of 6.5%, the same as the second quarter. In major accounts, which serves the largest companies in America, rates increased 5.3% with pricing up $8.6 and General casualty rates were up 8.7%. Property rates were up 9.7% and financial lines rates were up 4.3%. In our E&S wholesale business, rates increased 9%, with pricing up nearly 13%. Property rates were up about 11.5%. Casualty rates were up 8.5% and Financial Lines rates were up almost 9%. In our Middle Market business, rates increased 4.2%, excluding comp, with pricing up about 6.5%, rates for property were up over 6% and pricing was up double-digit, casualty rates were up 6.5%, with pricing up over 8% and comp rates were down 3.8%. However, comp pricing was up 6.5%. Financial Lines rates were up just over 1%, with pricing up about 2%. Our North America high net worth personal lines business had a very good quarter, with net premiums up over 7%, driven by strong new business activity. Our true high net worth client segment grew 12.5%, while overall retention was very strong at over 98%. In our homeowners business, we achieved pricing of about 11%, while the homeowners loss cost trend is running about 10.5%. Turning to our International General Insurance operations. In constant dollars, if you haven't noticed, 2022 is the best organic growth we have experienced in nearly a decade. In the quarter, retail commercial P&C premiums grew 12.3%, while London wholesale grew over 9.5%. Retail commercial growth was led by Latin America with premiums up 23.5%, followed by growth of nearly 15.5% in Asia Pacific and over 10% in our UK and Europe division. Internationally, like in the US, we continued to achieve improved rate to exposure across our commercial portfolio. In our International Retail business, rates increased in the quarter 9%. While we estimate pricing was up about 12%. Rates varied by class and by region as well as country within region. Outside North America, we are currently trending loss costs at about 6.5%. Again, similar to the second quarter, though that varies by class of business and country. Like in North America, these trends factors are contemplated in both our reserving and in our accident year loss picks. International consumer lines growth in the quarter picked up considerable momentum with premiums up over 13%, though FX scrubbed about 11.5 points off the growth. Our international A&H division had an exceptionally strong quarter. Premiums grew over 22.5% in constant dollar with Asia Pac up over 34%, the UK up over 26% and Latin America up 17%. Our international personal lines business grew more modestly in the quarter, with premiums up 4.5% in constant dollar. Premiums in sub-life were up 117% in constant dollars and impacted heavily by the Cigna acquisition. Cigna's operation contributed about $740 million in net premiums written and $160 million in income to the Life segment this quarter. We have hit the ground running in terms of integration and execution of our growth strategies in Asia. So to sum it all up, all of our businesses across the globe contributed to growth and earnings in the quarter. We are firing on all cylinders. We are operating in a challenging economic environment, given inflation, the specter of recession and financial market volatility, as well as the geopolitical environment and the evolving risks from climate change. Despite all of that, looking forward, we are quite bullish on the future, given our growth and exceptional underwriting margins in our commercial and consumer P&C businesses, the strong trajectory for investment income and the contributions from the Cigna acquisition to our growing Asia Life business. We expect EPS to continue to grow at a healthy rate into the future. I'll turn the call over to Peter and then we're going to come back and take your questions.

Karen Beyer:

Thank you. And at this point, we'll be happy to take your questions.

Michael Phillips:

Thank you. Good morning, Evan. Good morning everybody. Evan, I wanted to draw down on your comments on the loss trends in North America at 6.5%, your pricing and reserving above that. You talked about in the second quarter that what you're actually seeing in the market is somewhat below that. I assume that's still the case, but I wonder if that's narrowed a bit this quarter?

Michael Phillips:

Similar. Okay, great. And then industry level question. I was just curious your thoughts here. With all that's going on in the property category insurance market. Does that extend to other areas? Does that extend to primary casualty? And will that help lengthen the hard market? And how about in primary markets there?

Michael Phillips:

Yeah. Okay, great. Thank you Evan.

Operator:

Your next question is from the line of David Motemaden with Evercore ISI. Your line is open.

David Motemaden:

I've heard a lot of pronunciations over the years. So never seize this to amaze me.

David Motemaden:

Both tough ones. I was hoping just to get an update on the growth prospects for Chubb in the property market. You mentioned you have the capacity to grow here as long as you're compensated but some pricing still needs to accelerate from here. I guess, how should we think about the runway you have to capitalize on this? But I think is -- I think it's around 16% of your book right now, if I look across the P&C business. If I just thought about property as a percentage of total. Is there a -- is there a ceiling that you think about in terms of introducing too much nat cat risk into the earnings, or yes, I guess, just wondering how you're thinking about how much -- how big you want that to get?

David Motemaden:

Got it. That's helpful. And then maybe if I could just follow-up on the casualty rates. You mentioned that you think that rates need to increase at an accelerated pace or else the industry will fail to keep pace with trend. I guess -- could you just talk about what you're seeing across the various lines? It looks like Fin Pro [ph] or Professional Lines, Financial Lines might be taking a step down. It looks like you guys are remaining disciplined just based on your premiums growth and Financial Lines. But maybe just talk a little bit about that and how you think the market is placed and competitiveness in that line?

David Motemaden:

Got it. That make sense. Thank you.