The conference call for Chubb Limited's third quarter 2023 earnings began with the operator introducing the speakers and providing instructions for the question-and-answer session. The Senior Vice President and Director of Investor Relations, Karen Beyer, then discussed the company's forward-looking statements and non-GAAP financial measures. The Chairman and CEO, Evan Greenberg, and the Chief Financial Officer, Peter Enns, then spoke about the company's outstanding quarter. Other members of the management team were also present to assist with questions.

The company had a strong performance with double-digit global P&C premium growth, record net investment income, and strong life operating income leading to record operating earnings per share. The underwriting results were excellent with an 88.4% combined ratio and strong earned premium growth. The company's reserve development was favorable and their approach to reserving is cautious. They also had a strong investment income with a portfolio yield of 4.1% and a reinvestment rate of 6.2%. The company has strong liquidity and their investment income is expected to continue to grow.

The company's income is growing without increasing their risk profile. They have increased their ownership in Huatai Group, which has positively impacted their EPS and ROE. Net premiums for the company have increased by 9%, with significant growth in their P&C and Life divisions. The company remains vigilant about monitoring loss cost inflation and has seen strong rates and price increases in their P&C lines. In North America, commercial premiums have increased by 8.7%, with P&C growth of 10.5% excluding financial lines.

The company's middle market division had a strong quarter with premium growth of 16.3% and financial lines up 1.5%. Overall, pricing for commercial insurance in North America increased by 9.3%, with property pricing up 23% and casualty pricing up 11%. Workers' comp pricing was up 5.5%, with flat rates and increased exposure. Loss costs are trending at 6.7% in North America and 5.8% in short tail classes. Financial lines rates and pricing were down 4.8% and 3.8%, respectively, and loss costs are trending at 4.7%. Renewal retention was 92.7% and new business grew 14%. The high-net-worth personal lines business had a strong quarter with premiums up 9.5% and strong retention and new business growth. In the homeowners business, pricing was at 15% and selected loss cost trend was 10.5%.

In the fifth paragraph, the company reports a 21.5% increase in net premiums, with a significant contribution from the consolidation of Huatai. International commercial and consumer businesses both saw strong growth, particularly in Latin America, Europe, and Asia Pacific. The company also achieved improved rate to exposure across its international commercial portfolio and steady loss cost inflation. In the international life business, premiums were up 20%, and segment income increased by 15%. Overall, the company had an outstanding quarter and is confident in its ability to continue growing revenue and operating earnings globally.

Peter Enns, speaking on behalf of Chubb, announced that the company has completed its first quarter with Huatai Group as a consolidated subsidiary. The company reached two milestones this quarter, with invested assets reaching $130 billion and adjusted net investment income exceeding $1.4 billion. Moody's affirmed and improved their outlook for the company, and S&P affirmed their rating earlier this year. Core operating ROE and return on tangible equity were both strong, and book value per share increased. However, tangible book value per share decreased due to the dilutive impact of consolidating Huatai. Huatai had a modest impact on results this quarter, adding $0.12 to core operating income per share.

In the previous quarter, adjusted net investment income for the company was a record $1.415 billion, $140 million above their guidance. This increase was mainly due to the inclusion of Huatai, a strategic partner of the company. The company remains conservative in their investments, with 83% of their fixed income portfolio rated investment-grade. They also recognized an unrealized loss of $2.2 billion after-tax and a modest favorable recovery of expected credit losses. Huatai's investment assets added $12.7 billion to the company's investment portfolio. In terms of underwriting, the company had pre-tax catastrophe losses of $670 million, with 82% in the U.S. and 18% internationally. They also had favorable prior-period development of $261 million.

The company experienced adverse development in their corporate run-off lines due to environmental exposures. Their paid-to-incurred ratio for the quarter was 73% and their core operating effective income tax rate was 18.8%. They are now open for questions and the first question is about their view on recent development in the U.S. casualty reserves, to which the CEO responds that there is nothing new and this has been a topic for a number of years. He also mentions that reinsurers have lagged in recognition and are just beginning to catch up.

The speaker discusses the slow recognition of cyber insurance as a new and evolving line of business in the insurance industry. They mention recent high-profile cyber breaches and the impact on pricing and industry positioning, noting the evolving nature of the exposure and the need for risk management and underwriting improvements. They also mention the active environment for cyber losses and the need for industry pricing and coverage to reflect this.

Greenberg discusses the success of Chubb's crop cyber business and the need for discipline in other segments. He also mentions the once in a generation hard market in the auto insurance market and explains that Chubb does not have a presence in the personal lines market in North America. The company's focus is on their niche high net worth market, which gives them a distinct advantage. Outside of the US, general auto and homeowners insurance is a commodity business that is often pursued for volume rather than profitability.

The company is very selective in their approach to underwriting and constantly researches different environments to bring a competitive advantage to the marketplace. Mexico is one of the countries where they have a successful auto insurance business. The interviewer asks about the company's views on reinsurance pricing and the CEO clarifies that their reinsurance business actually grew by 20% in the third quarter, but they are focusing on growing their insurance property and catastrophe-related exposure instead.

The company has focused on increasing its exposure and capital in the insurance side, particularly in the areas of transparency, distribution, and underwriting expertise. They are being cautious in the reinsurance casualty market but may increase their presence if conditions improve. The company remains patient and cautious in order to outperform in the insurance business. In North America commercial, net premium written growth is in line with expectations, but gross premium written growth has decelerated due to various factors.

The question addressed to Evan Greenberg in this paragraph is about the North America commercial segment and its reserve levels. The question mentions that reserve release levels have been 50% lower than last year and Chubb's historical five-year average. The question implies that something has changed and investors are curious about this. The paragraph also acknowledges that the combined ratio is still good.

The speaker, Evan Greenberg, addresses a question from investors about why loss cost inflation assumptions have not changed significantly despite reserve release levels changing. He explains that loss cost inflation impacts current accident year and in-force reserves, and as these reserves continue to develop, adjustments are made based on inflation factors. He also notes that Chubb has had positive reserve development historically and includes legacy run-off exposure in their calculations. The questioner, Mike Zaremski, thanks Greenberg for correcting his understanding.

The speaker discusses the exposure acting as rates for Chubb-specific exposure and how it varies by line of business. They also mention how economic and insurance adjustments can affect exposure. In response to a question about the crop business, they state that there was no specific trigger for the early recognition of prices or yields, but rather they had better information.

In the third quarter, winter wheat and storm events in California caused losses for the company, resulting in a higher loss ratio than the previous year. The CEO also discussed the effects of healthcare inflation on workers' compensation reserves. During the earnings call, it was clarified that the reported 13.9% pricing increase in North America commercial excludes financial lines. Additionally, the company has seen strong but slightly less momentum in property pricing.

Evan Greenberg, the CEO of Chubb, disagrees with a comment about property pricing and states that it remains strong at 23%. He also mentions that there is no significant difference in pricing based on seasonality or competition. When asked about workers' compensation offsetting the $55 million adverse development in long-tail lines, Greenberg states that there was some offset in middle market but does not provide specific numbers. He also mentions that there are concerns about the medical loss environment, but he does not share these concerns.

The speaker, Evan Greenberg, is asked about the potential impact of rising medical inflation on the insurance industry. He states that his company, Chubb, has already adjusted their loss picks to account for this and has been steady in their use of these numbers. He also clarifies that he cannot comment on how other companies in the industry are handling this issue as he only manages Chubb. He does not want to discuss pricing in the market as it is separate from loss picks and underwriting decisions.

Evan Greenberg, CEO of Chubb, discusses the company's strong combined ratios and responsible pricing across their portfolio. He emphasizes the importance of looking at the published combined ratio and adequately charging for property and property cat exposure. He also dismisses the focus on sequential changes and instead highlights the overall improvement in North America's loss ratio.

Evan Greenberg discusses the underwriting process for financial lines and notes that the industry can be unpredictable at times. He mentions that while some areas are stable and well-managed, others are facing intense competition and overcapacity. He advises not to lump all financial lines together and highlights the importance of managing risks in the general casualty lines.

The speaker discusses the current state of the insurance industry, noting attractive combined ratios and high long-term interest rates. They also address potential pricing weakness in the future and the impact of higher yields on loss cost inflation. The speaker then briefly touches on the growth opportunities and operations in Asia.

The speaker discusses the business operations of the company, stating that half is focused on commercial business and half on consumer business. They highlight their success as the largest direct marketer of insurance in Asia and the close collaboration between their life and non-life operations. The company has strong digital capabilities and utilizes a combination of phone-based and digital marketing. They also have a diverse distribution and product strategy across 12 distinct markets in Asia and North America. The speaker is optimistic about the economic growth potential of these regions, particularly in Asia outside of China. They emphasize the importance of local market knowledge and capability in these dynamic markets.

The operator concludes the conference call and reminds participants that they can call back with any additional questions. They wish everyone a good day and instructs them to disconnect from the call.

This summary was generated with AI and may contain some inaccuracies.