Chubb(CB) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Core operating EPS growth exceeded 15.5% for the quarter, with core operating income reaching $2.3 billion, up 14.3% [6][7] - Global P&C premium revenue grew 7.6%, or 8.5% in constant dollars, reflecting strong contributions from various business segments [6][13] - Net and operating income for the year increased by 16.9% and 13.8% respectively, with record levels achieved [7][29] - The published combined ratio for the quarter was 87.7%, with P&C underwriting income of$ 1.5 billion, up over 11.5% [8][9] Business Line Data and Key Metrics Changes - Life insurance segment income was $284 million, ahead of plan, with annualized core operating ROE for the quarter at 13.9% [12] - North America P&C premiums excluding agriculture increased by 7.8%, with personal insurance growing by 10% and commercial by 7.2% [16] - International general insurance operations saw net premiums up 4.9%, or 7.5% in constant dollars, with Asia Pacific leading growth at 9.2% [23][24] Market Data and Key Metrics Changes - Commercial premiums increased by 8.1%, while consumer premiums rose by 9.4% [13] - Life premiums grew 10.6% in constant dollars, with international life growing by 10% and North America by 15% [14] - The property book is well-priced, with terms and conditions remaining steady, while casualty pricing in North America was up 12.7% [20][22] Company Strategy and Development Direction - The company aims to continue growing operating earnings and EPS at a superior rate, focusing on P&C revenue growth, investment income, and life income [28] - Management emphasized the importance of risk selection and pricing in maintaining competitive advantages in the underwriting market [36] - The company is confident in its ability to reinvest cash flows at rates that will enhance overall portfolio yield [11][12] Management's Comments on Operating Environment and Future Outlook - Management noted that loss cost inflation remains steady and is accounted for in pricing and reserving [15] - The company expects the Fed to take a cautious approach to lowering rates, which will support future reinvestment rates [10] - Management expressed confidence in the ability to navigate competitive pressures, particularly in the London wholesale market [65] Other Important Information - The company returned$ 782 million to shareholders in the quarter, including $413 million in share repurchases and$ 369 million in dividends [30] - Adjusted net investment income for the quarter was $1.64 billion, with a fixed income portfolio yield of 4.9% [10][29] - The company issued$ 700 million of 5-year debt and $600 million of 10-year debt at an attractive average cost of under 5% [30] Q&A Session Summary Question: North America commercial growth expectations - Management refrained from providing specific guidance but indicated confidence in continued growth due to strong new business and retention rates [35][36] Question: Impact of competition in London on international growth - Management clarified that London wholesale business is only 10% of international operations, with strong growth expected from Asia and other regions [37][38] Question: Expectations for property lines amid hurricane activity - Management noted that pricing remains firm and continues to increase due to active weather events [41] Question: Details on adverse development in casualty - Adverse development was primarily from general casualty, with mixed results across long-tail classes [42] Question: Outlook for troubled classes in North America commercial - Management indicated that there are still a few quarters to go before fully addressing troubled classes, but the impact is not significant relative to total premiums [44][45] Question: Casualty pricing dynamics and adequacy - Management emphasized that pricing varies by area and that the majority of their portfolio is adequately priced [68][90] Question: Growth in invested asset base - Management confirmed that the growth in the invested asset base is driven by overall business growth and strong margins [71] Question: Financial lines premium performance - Management stated that they are not writing business unless it is profitable, indicating a focus on maintaining profitability in D&O and other financial lines [73]