Earnings call transcript: Chubb Q1 2025 sees income drop, tech investments rise

In the first quarter of 2025, Chubb Limited (market cap: $113.73B) reported a 31% decline in core operating income, reaching $1 billion. Despite the decrease, the company observed a 5.7% growth in total premiums in constant dollars. According to InvestingPro analysis, Chubb maintains a GREAT financial health score of 3.08, with the stock currently trading below its Fair Value, suggesting potential upside opportunity. Chubb continues to focus on technological advancements, with an annual investment of $1.1-1.2 billion, aimed at modernization and improving processing capabilities. The company’s stock price remained stable following the earnings report.

Key Takeaways

• Core operating income decreased by 31% to $1 billion.
• Premiums grew by 5.7% in constant dollars.
• Technology investments are set at $1.1-1.2 billion annually.
• Book value reached an all-time high of $164 per share.
• $751 million returned to shareholders through buybacks and dividends.

Company Performance

Chubb’s performance in Q1 2025 was mixed, with a notable decline in core operating income but positive growth in premiums. The company’s focus on technology and innovation continues to drive its strategy, aiming to maintain a competitive edge. The acquisition of Liberty Mutual’s business in Thailand and Vietnam contributed $275 million in premiums, indicating a strategic expansion in the Asian market.

Financial Highlights

• Core operating income: $1 billion, down 31% year-over-year.
• Total company premiums: Up 5.7% in constant dollars.
• Combined ratio: 95.7%.
• Underwriting income: $441 million.
• Adjusted net investment income: $1.7 billion, up 12.7%.
• Book value per share: $164.

Outlook & Guidance

Chubb remains optimistic about achieving double-digit earnings and EPS growth despite economic uncertainties such as increased recession probability and inflation. InvestingPro data shows analyst targets ranging from $245 to $335, with a dividend growth rate of 5.81% demonstrating the company’s commitment to shareholder returns. The company plans to continue focusing on middle market and small business opportunities, maintaining a disciplined investment approach. No further capital allocation is planned for China, reflecting a cautious stance in the region.

Executive Commentary

CEO Evan Greenberg emphasized the importance of technology in maintaining the industry’s best expense ratio, stating, "Technology helps to maintain what is the best expense ratio in the industry." He also highlighted the inherent risks in the business, noting, "We are in the risk business. Volatility is a feature."

Risks and Challenges

• Economic Uncertainty: Increased recession risks and higher inflation could impact consumer spending and insurance demand.
• Competitive Pressure: The large account property market remains highly competitive, potentially affecting pricing and profitability.
• Trade Policy: Uncertainty in trade policies could disrupt international operations and growth strategies.
• Global Economic Growth: Lowered expectations for global economic growth may affect international premium growth.
• Technological Investments: Balancing the cost of technological advancements with operational efficiency is crucial.

Chubb’s strategic focus on technology and disciplined underwriting continues to position the company well in a challenging economic environment. However, the company remains vigilant about potential risks and is taking steps to mitigate them while capitalizing on growth opportunities. For deeper insights into Chubb’s financial health, valuation metrics, and growth prospects, access the comprehensive Pro Research Report available on InvestingPro, which includes over 30 key metrics and expert analysis.

Full transcript - Chubb Corp (CB) Q1 2025:

Eric, Conference Operator: 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 twenty twenty five 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.

I would now like to turn the call over to Karen Byatt, Senior Vice President, Investor Relations. Please go ahead.

Karen Byatt, Senior Vice President, Investor Relations, Chubb Limited: Thank you, and welcome to our 03/31/2025, first quarter earnings conference call. Our report today will contain forward looking statements, including statements relating to company performance, pricing and business mix, growth opportunities and economic and market conditions, which are subject to risks and uncertainties, and actual results may differ materially. Please see our recent SEC filings, earnings release and financial supplement, which are available on our website at investors.cheubb.com for more information on factors that could affect these matters. We will also refer today to non GAAP financial measures. Reconciliations of which to the most direct comparable GAAP measures and related details are provided in our earnings press release and financial statements.

Now I’d like to introduce our speakers. First, we have Evan Greenberg, Chairman and Chief Executive Officer followed by Peter Enns, our Chief Financial Officer and then we’ll take your questions. Also with us to assist with your questions this morning are several members of our management team. And now it’s my pleasure to turn the call over to Evan.

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: Good morning. Let me begin with a few words around the external environment. There is currently a a great deal of uncertainty and confusion surrounding our government’s approach to trade. It’s impacting business and consumer confidence as well as our image fraud. The odds of recession have risen substantially, and higher inflation is all but certain.

To what degree is an open question. We have competing priorities between our stated trade, economic and fiscal objectives, and coherence of policy has yet to emerge. I hope we can reach agreements on trade, reduce or eliminate tariffs and reconcile our priorities quickly. Certainty and predictability are jacks to open for confidence. Growth in the image of our country as a leader, a reliable partner and a place to do business.

As you saw from the numbers, we had a good first quarter considering the significant catastrophe losses we incurred from the California wildfires. In terms of revenue growth, the headline number was impacted by foreign exchange due to the strong dollar, which has since weakened substantially, and onetime premium related items in our North American business. We produced $1,000,000,000 in core operating income, and it was down 31%. It was supported by excellent underlying underwriting results, double digit growth in investment income and strong life insurance income. Total company premiums grew 5.7% in constant dollars.

Our published combined ratio was 95.7 with underwriting income of $441,000,000 a notable result given $1,600,000,000 of cat losses. Calendar year underwriting income was supported by a current accident year combined ratio of 82.3, a nearly 1.5 improvement from prior year. Excluding CATs, current accident year underwriting income was up 12%. Additionally, we had favorable prior year reserve development dollars $255,000,000. On the asset side for the quarter, adjusted net investment income was $1,700,000,000 and it was up 12.7%.

Our fixed income portfolio yield is 5%, and our current new money rate is averaging 5.5%. Tariffs and the federal budget deficit impact interest rates, the yield curve, spreads, asset values and the dollar in ways that are not good for our country. As a company, we are predominantly buy and hold fixed income investors and benefit from higher yields. And as a multinational, our revenue and income benefit from a weaker dollar. In the quarter, our alternative investments produced modestly lower than usual private equity distribution related income.

It’s a combination of simply normal volatility and financial market conditions. Our annualized core operating return on tangible equity in the quarter was 13%. Peter is going to have more to say about the financial items. As you saw in the first quarter, we announced an agreement to acquire Liberty Mutual’s business in Thailand and Vietnam. The two companies offer a range of consumer and commercial E and C products with distribution through 56 branches and 2,600 brokers and agents.

Both fit well with our own business. Combined operations produced about $275,000,000 in premiums in 2024, over 90% of which is in Thailand. For perspective, Thailand is now over $1,000,000,000 in premium revenue for Chubb, non life and life, and we’re among the leading P and C companies in the country once the entities are merged. In fact, we’ll be number four. We closed Thailand April One and expect to close Vietnam by early twenty twenty six.

Now turning to growth, pricing and the rate environment. P and C revenue grew 3.2% in the quarter, 5% in constant dollars, with commercial up 4.6%, consumer up six Adjusting for the onetime items in North America, P and C premium revenue grew over 6.5% in constant dollar. All regions of the world contributed favorably. Premiums in our life insurance division grew over 10%. In terms of the commercial P and C underwriting environment, large account related short tail business, both admitted and E and S, is growing quite competitive.

A lot more capital is chasing the business. Prices are softening. We are, of course, disciplined, and we’re not going to write business below a technically adequate price. On the other hand, middle market and small commercial property, both admitted retail and non admitted wholesale or E and S, remain much more disciplined and orderly. Rates, in fact, continue to rise, and we are growing in this area.

Casualty continues to firm in all areas that require rate, retail and E and S, both large account and middle market. And again, we’re growing. Financial lines remain soft. With that as backdrop, I want to give you some more color by division. And we’ll start with North America, where premiums were up 3.4%.

Growth, again, was impacted by the two onetime items I mentioned: reinstatement premiums related to the California wildfires in personal insurance and larger than usual one off structured transactions, pink loss portfolio transfers written last year in our major accounts commercial division. Adjusting for both, North America was up 6.4%, including growth of 10.1% in personal insurance, 5.3% in commercial. Commercial P and C lines were up 6.4%, and financial lines were down 1.3%. Looking through those onetime items is a more representative view of our run rate growth for North America commercial P and C. Premiums in our very large middle market division increased almost 8%, an excellent result.

P and C up over 10% and Financial Lines down about 2%. Premiums in our major account and specialty division declined 1.7%. And adjusting for the onetime transactions, they were up 3.130.6% in P and C and Financial Lines down 1%. Major and Specialty is comprised of E and S business, which was up 10.7 and our major accounts retail business, which was down 1.3%. Overall, pricing for property and casualty, excluding thin lines and comp, was up 8.3%, with rates up 6.4% and exposure change of 1.8%.

Going a step further, property pricing was up 3.1% with rates down 0.7 offset by exposure change of 3.8%. For property, pricing was down 9.6% in large account business, both admitted and E and S, and up 10.2% in middle and small, again, both admitted in E and S. Casualty pricing in North America was up 13.4, with rates up 12.6% and exposure up 0.7%. Financial lines pricing was down 3.2%, and that’s all rate. In comp, primary comp pricing was flat, while large account risk management was up 7.5%.

In North America commercial, our selected loss cost trend has declined modestly from 6.8% in ’24 to 6.5%, with casualty running 8.9% and property 4.5%. We are mindful of a potential impact tariffs could have on short tail lines of business and we’re watching closely. On the consumer side of North America, our high net worth personal lines business had another very strong quarter with premium growth of 10.1 adjusted for the reinstatement premiums. New business growth was almost 20%. Premiums in our upper high net worth segments grew over 16%.

Homeowners pricing was up 12.5% in the quarter and ahead of loss costs, which are running 8.7%. Turning to our international general insurance operations. Premiums were up 1.8% or 6.5% in constant dollar. The dollar was considerably stronger in the first quarter versus a year ago but has substantially declined in value versus major currencies in recent weeks. In the quarter, international commercial lines grew about 7.5%.

Consumer was up 5%. From a region of the world perspective, Asia and Latin America both grew 6.1%, while Europe grew 5.5%, including growth of 6% on the contract, while premiums in our London wholesale business were up nearly 8%. In our international retail commercial business, P and C pricing was up 2.6 and financial lines pricing was down 5.5%. Loss cost trends in international retail were in fact down 80 basis points from 24%, five point eight % to 5%. Our global reinsurance business had a strong quarter with premium growth of 14%.

In our international life insurance business, which is fundamentally Asia, premiums and deposits were up 15.5% in constant dollar. And in combined insurance company, our U. S. Worksite business grew 18.6%. Our Life division produced over $290,000,000 of pretax income in the quarter, up 15.7% in constant dollar.

In summary, we are in the risk business. Volatility is a feature. While we are impacted by the wildfires, our underlying fundamentals are excellent. We had a good quarter. And as I observed at the beginning of the year, about 80% of our global P and C business, commercial and consumer and our Life business, very good growth prospects.

In fact, when you listen as I read to you and described going across divisions, the growth rate of the various businesses, FX aside, I think that speaks to the broad nature and the 80% I’m talking about. There is a lot of opportunity, and I’m mindful that the external environment has become more uncertain. I have confidence in what we can control. In that regard, in our ability to continue growing operating and earnings and EPS at a double digit rate, PATs and FX notwithstanding. I’m going to turn the call over to Peter, and then we’re going come back and take your questions.

Good morning. Our strong first quarter results were supported by exceptional balance sheet strength and liquidity. Book value now stands at 65,700,000,000 and reached an all time high of $164 on a per share basis. And total invested assets were $152,300,000,000 The quarter produced adjusted operating cash flow of $2,000,000,000 including approximately 600,000,000 of net loss payments for California wildfires. In the quarter, we returned $751,000,000 of capital to shareholders, including $385,000,000 in share repurchases and $366,000,000 in dividends.

The average share price on our repurchases for the quarter was $286.18 Book value for the quarter was favorably impacted by unrealized mark to market gains on our high quality fixed income portfolio due to declining interest rates. Book and tangible book value per share excluding AOCI grew 0.91.6% respectively for the quarter. As you know, rates have since backed up. Our core operating return on tangible equity for the quarter was 13%, while our core operating ROE for the quarter was 8.6%. The quarter included pretax catastrophe losses of $1,640,000,000 Excluding the California wildfires, the approximately $170,000,000 balance was principally weather related, split 74% U.

S. And 26% internationally. Prior period development in the quarter in our active companies was a favorable February pretax with favorable development of $313,000,000 in short tail lines, a mix of commercial and consumer, and unfavorable development of $45,000,000 in long tail commercial lines. Turning to investments. Our A rated portfolio produced adjusted net investment income of GBP 1,670,000,000.00, which was at the lower end of our six month guidance and was negatively impacted by approximately GBP 25,000,000 of lower than usual private equity distributions and realizations and

Peter Enns, Chief Financial Officer, Chubb Limited: $10,000,000

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: of unfavorable FX movements. The income generated from our public fixed income, private credit and strategic holdings portfolios performed in line with expectations. While the direction of financial markets remains uncertain and volatile, we expect second quarter adjusted net investment income to be at the midpoint of our previously guided six month guidance. Our paid to incurred ratio for the quarter was 87 or 86% excluding cats, PPD and agriculture. Our core effective tax rate was within our previously guided range of 19.1%.

We continue to expect our annual core operating effective tax rate to be in the range of 19% to 19.5. I’ll now turn the call back over to Karen.

Karen Byatt, Senior Vice President, Investor Relations, Chubb Limited: Thank you. At this point, we’re happy to take the questions.

Eric, Conference Operator: Your first question comes from the line of Gregory Peters with Raymond James. Go ahead.

Gregory Peters, Analyst, Raymond James: Good morning, everyone. Evan, in your comments, recognize your 80%

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: growth on Yes, Craig. Hey, Craig, can you start again? We you garbled in the beginning. We didn’t get it.

Gregory Peters, Analyst, Raymond James: Got it. Good morning, everyone.

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: Did

Gregory Peters, Analyst, Raymond James: you hear that okay?

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: Yeah. I got it. Yeah. Alright.

Gregory Peters, Analyst, Raymond James: So in your comments, Evan, you talked about the 80% of the business and the growth outlook. The tariffs are an issue, potential for increasing inflationary pressures. You called out the risk of recession. And frankly, it feels like there’s increasing price competition in many lines of property casualty insurance, in North America and globally. So with all of that, how are you thinking about the growth strategy for the company both inside and outside The U.

S?

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: Yes. There’s there’s no change to our strategy. Our strategy is is is enduring. We see growth opportunities that sometimes you get more joy for the pleasure depending on market conditions. Sometimes you get less, but that doesn’t change the opportunities.

And I think as I just went through for you, it’s very it’s it’s steady with and and I’ll put a point on it from what we talked about at year end. We talked about at investor dinners. My shareholder letter speaks to middle market and small business globally for us growth opportunities. It varies. That’s a big space.

And we have our own unique strategies to pursue that opportunity. And it is a global opportunity again. E and S in The U. S, which again, frankly, is a theme of small commercial and middle market commercial. Our personal lines business in The U.

S, our consumer business overseas. And then, of course, there are areas of large account business that continue to show good growth opportunity right now to us. And some of that is more tactical, and some of it is more strategic. Yes. Property is growing.

And everything I’ve had to say is is is contemplating the underwriting environment as we see it, which is not directionally not a surprise to us. And we’ve been talking about it. Property growing more competitive in large account, whether it’s E and S or admitted. Middle market property and small remains more disciplined that way. And casualty business is responding to loss cost environment.

And then you add to all of it the things we’ve been doing to improve job in terms of our presence geographically, in terms of how we approach segments of business, in terms of industries that we have an expertise or focus on, think of climate plus right now, Think of lines of business like cyber. And then you think of our technology and what we’ve done that way in our use of data that allows us to access more customers depending on geography and to partner with different forms of distribution to reach customer segments, whether it’s middle market in Asia or it’s automobile in Mexico or frankly, it’s pet insurance in The United States. And I could go on. Thank you for the question.

Gregory Peters, Analyst, Raymond James: Thank you for the details. I have a follow-up. I was gonna go on one direction, but then you brought up technology. And, you know, for us on the outside, when we ask you about technology, you know, we’ll get a couple sentence answer, but it’s really hard for us to figure out what’s really going on and what’s what’s sort of maintenance technology spend versus what’s game changing. In in your annual report, you you put a technology sort of theme on the cover.

So maybe you can spend a minute and give us some additional commentary on the technology piece as part of your first answer.

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: Yeah. I understand. You’re at a place where you make the comment, it’s hard for you guys to figure out what’s going on. I got it. And we’re we have no intention of being more transparent than we than we are.

I’ve said before we spend, you know, over a billion dollars. It’s about $1100000000.01200000000.0 dollars on technology. Roughly half is maintenance and managing what we got, 50%, fifty five % of it. And the balance is development of all kinds, whether it’s legacy, more what you think of as legacy modernized to provide straight through processing, whether it is technology around the use of data to improve analytics, to improve our AI capabilities, to supplement what humans do or replace what humans do or improve our insight, whether it’s technology that allows us to connect to both customer and distribution partners in an efficient way, whether it’s technology and how it’s used that speeds up our cycle times of change. We’re just far up the road in this.

And technology helps to maintain what is the best expense ratio in the industry and over time even lower that expense ratio. So thanks a lot, Greg.

Gregory Peters, Analyst, Raymond James: There was some actually some useful information in that answer, so thanks for your time.

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: There you go. I just got it at a certain level. I can’t give a road map to everyone else who would like one from us. Makes sense. Thanks a lot.

Eric, Conference Operator: The next question comes from the line of Mike Zaremski with BMO Capital Markets. Please go ahead.

Peter Enns, Chief Financial Officer, Chubb Limited: Hey, thanks. Good morning. In regards to the outlook commentary you made, Evan, about continuing to expect operating income, EPS to grow at a double digit rate. And I think you were saying ex catastrophes and FX. I’m curious if you can kind of give us a flavor of what you think catastrophe inflation is.

I guess we can obviously see in our models cat losses for you all and others. And I feel like Chubb’s cat loss has actually been better than expected, but still elevated for the industry. So any sense of kind of how Chubb is thinking about weather loss inflation and whether you’re able to keeping up or not? Thanks.

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: Yeah. Mike, on inflation, I gave you and put out their loss cost trends that’s that we are using. Not as proxy. I can’t I don’t have a crystal ball, and I cannot prognosticate where inflation actually goes from here in terms of rate and to which goods and products. It’s any increase in inflation is fundamentally tariff related, and that’s a moving target in a chaotic picture at the moment.

And it’s the kind of thing that we can stay on top of if we’re watching early data around goods and around labor costs have to do with physical property construction, reconstruction, infrastructure, etcetera. So, you know, that part, we’re keeping our eye on, but I gave you I gave you some sense of inflation. On FX, we have no idea. It bounces around. It’s ephemeral.

The direction of travel and if policies continue is weaker dollar. When it comes to catastrophes, well, you’re asking me a crystal ball view. There is a natural volatility. Talk about it all the time, but a round cap. Some you’re never going to hit what you price for exactly, which is what the AALs are and what you’re expected is in a quarter.

It’s either above it, it’s below it. It moves around. And whether one year is to be heavier than the year before, which for us was lighter last year the year before that, who knows? I think hand wring I don’t do any hand wringing about it, and we’re not. And we update, which is more important to us, we update our view around cats by peril on an ongoing basis as data additional data comes in and we have more insight.

And that allows us to ensure that the way we’re pricing for risk and our accumulation appetite around cat perils by geography are within what we’d imagine and contemplate. That’s how we run the business. And volatility quarter to quarter, that’s not our obsession.

Peter Enns, Chief Financial Officer, Chubb Limited: Understood. That’s helpful. Just switching gears quickly.

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: By the way, I gave you all that as an answer, but we don’t give guidance. So

Peter Enns, Chief Financial Officer, Chubb Limited: I mean, understood. As you know that we tend to look at, recent cat loads and update future cat loads, you know, taking the new average. So but switching gears both quickly

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: I’ve the kind of consensus, which is an aggregation of different analyst work, I’ve never found it, you know, something other than reasonably rational to me. I don’t look at point estimates. I look at the trend of it in the relative neighborhood of quantum, and, you know, I’ve never found it anything but rational.

Peter Enns, Chief Financial Officer, Chubb Limited: Okay. Understood. I feel like maybe back in the day, there was a view of your cat load in the proxy, but I can’t remember if that was removed or still there. But just switching gears real quick to I think much of our incoming from investors is focused on North America, commercial, social inflation. Reserve releases, very strong this quarter.

Any comments on kind of the environment? I know you gave us the update on what you felt your loss cost inflation was, but any commentary on puts and takes on reserve releases or even the underlying loss ratio was excellent and improved this quarter? Thanks.

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: No. The only thing I will say for those who are obsessed simply about North America, it’s a large part of our business, but it’s it really it it it just it it misses the story of Chubb and and who we are and the global nature of the business. Outside of The United States is not some gray mass that does just a thing out there. It’s 54 countries in vital regions of the world. And you look at the growth and you look at the quantum and you look at the contribution to simply obsess about North America and North America loss cost, I I think, actually, does investors a disservice, but I leave it to the to those to do their job as they think they think they ought to.

On on the reserve releases, you know, we we review again a cohort of portfolios, a different cohort each quarter and update our view of development. This quarter is generally a smaller quarter on what we review on both the property and the casualty side of

Robert Cox, Analyst, Goldman Sachs: the

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: business. And so there was this was just an amalgamation of those various long tail lines, smaller portfolios. It bidded N, E and S and property the same physical lines, the same.

Peter Enns, Chief Financial Officer, Chubb Limited: Thank you.

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: You’re welcome.

Eric, Conference Operator: Your next question comes from the line of Brian Meredith with UBS. Please go ahead.

Brian Meredith, Analyst, UBS: Hey, good morning, Evan.

David Motemaden, Analyst, Evercore ISI: First question, I believe your global property cat reinsurance program renewed on April 1. Any kind of changes that we should be thinking about there, cost retentions, etcetera?

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: No, sir.

David Motemaden, Analyst, Evercore ISI: Okay. So fairly similar to what is kind of laid out in the 10 ks right now?

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: Exactly.

David Motemaden, Analyst, Evercore ISI: Perfect. Thank you. And then second question is something I’ve been getting from some investors. Just curious, how do you think about allocating capital into areas that maybe the kind of political kind of environment right now is a little more contentious or maybe more than a little more contentious areas like China? How do you think about that right

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: as your capital allocation decisions? Well, the world is contentious. I have noticed. And our capital allocation, you see that we made acquisition of a modest nature in Southeast Asia. Will continue leaning in that way.

I think it’s a metaphor for the notion that it’s steady as she goes. China, US aside, the balance of the world, you know, there’s always gonna be a certain amount of volatility. There is and as a multinational, you know that. We’re mindful of the increased volatility that is occurring as a result of our particular, our administration’s approach to foreign policy and trade as it’s emerging. And and that keeps us mindful.

But and we’ll be thoughtful. We’ll be prudent, but our strategy is our strategy. We’re not short term investors. We’re long term investors, What we invest in a country is permanent, and and we participate in the economic and social development in those countries. And that is whether it is The United States or it is Thailand.

We are participants in that and where we and some have more volatility than others do. In a word, it’s steady as it goes for us. When it comes to China, which I think is on people’s minds in particular, we’re not actually investing any additional capital and haven’t been for a bit of time. And I don’t foresee additional capital investment in China. Our exposure is our exposure.

And by the way, the money doesn’t burn a hole in our pocket. How are we allocating capital? We’re allocating it for growth in our business where it occurs. We’re allocating capital for investments. And right now, we’re earning 5.5% north of that in our investment portfolio.

That seems like a pretty darn good bet to me, and I’ll put as much as I can into that.

Peter Enns, Chief Financial Officer, Chubb Limited: The

Eric, Conference Operator: next question comes from the line of David Motemaden with Evercore ISI.

Brian Meredith, Analyst, UBS: Good morning. Just a question. It definitely sounds like a tale of two cities on the property side with still the small and middle market remaining healthy, but definitely some areas of competition picking up in large account E and S. I’m wondering if you can help me think through just your view, Evan, if you think sort of that competition that we’re seeing in the large account E and S market is sort of a sign of what’s to come in the small and middle market? Or is there something structural that’s different between those two different markets that we should think about where the pricing in the middle market and small market is more durable on the property side?

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: So David, it’s always been structurally different. That’s the point. Large account business is brokerage driven. You don’t need a lot of physical presence. You you need not a lot of capability as a company.

You need capacity. You need some underwriters, and you can participate in the capacity play, large account business. Welcome to a lot of E and S. Welcome to London open market. Welcome to large companies, companies that engage in large account business and have just a few urban locations to do it at.

Now being the lead on those accounts, issuing the paper, managing the claims, doing the engineering, well, that starts to separate it. And how you participate. But think about shared and layered large account business. It’s a capacity play for most of it up and down the chain. So you come and you put a blind down.

Middle market, commercial insurance is widely distributed. Thousands of producers and agents, small average premiums. They typically don’t buy one line from you. They buy multiple lines from you. You’ve gotta have presence.

You’ve got to have a lot of capability to support the development of that kind of business. Yeah. But on the fringes, there are ends of it. It get boxed up by a few brokers, and they bring it in a facilitated way. But the vast majority of the market is now you’re talking about broad geographic reach, local reach, local capability, multiline, claims capability, engineering capability in a broadly distributed way.

David, welcome Vacciomatic of Did I leave you? I appreciate no.

Brian Meredith, Analyst, UBS: No. I I appreciate that. I I guess my mental model, I’ve always thought large account, more cyclical, sort of leads leads the middle market by year or two.

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: But but that’s right. That’s that’s why. Yeah. Yeah. Okay.

You you asked the question structural. It was a good word, so I focused on the word structure.

Brian Meredith, Analyst, UBS: Great. Thank you. Then

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: just as a follow-up,

Brian Meredith, Analyst, UBS: within the overseas general business, noticed the Europe growth ticked up a little bit. Probably too early to see any signs of any sort of fiscal spend over there resulting in an uptick in growth. But I’m wondering if how you’re thinking about that and having that exposure, how that positions you relative to The U. S. Market given all the headwinds that you sort of called out?

Eric, Conference Operator: Yes.

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: Are you thinking economic outlook for those regions?

Brian Meredith, Analyst, UBS: And with like the fiscal spending and what that might to sort of boost growth over there relative to some of the potential weakness that might be coming in The U. S?

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: Yes. We have the pleasure in The United States, and we ought to we ought to really cherish it of being the reserve currency of the world, which gives us a borrowing capability. It certainly doesn’t give any other region or country of the world, and let’s be careful how we abuse that or we won’t have that privilege. Others are more constrained in their ability to use fiscal stimulus. Europe, there’ll be more fiscal stimulus.

It’ll be both in the security and maybe in certain industries as the Europeans are determined to stand on their own two feet, be more independent of it. And the key is Germany, and they’re unlocking the door to much more fiscal, which will support economic growth. Now all over the world, the theme in our mind is that whatever we thought economic growth was going to be six months ago, to state the obvious, that number has come down. What it’ll actually be, we don’t know, and it’ll vary by region. Asia will be impacted.

Consumers in Asia will be impacted. Export and domestic industries will be impacted. How much is is a question mark because the fact set is not clear to us yet. But for Chubb, it’ll be steady as it goes. It means that growth could be could be better, growth could be a little worse.

Don’t know. And all that we had in mind when I said I am confident and remain confident in our ability to grow earnings and EPS at a double digit rate and are thinking about what could be volatility around growth notwithstanding that won’t have a significant impact on it at this time. Am I making sense to you? Yep, yep. No, makes sense.

Brian Meredith, Analyst, UBS: Thank you.

Eric, Conference Operator: Your next question comes from the line of Meyer Shields with KBW. Please go ahead. Thanks so much and good morning. Evan, I was hoping you could

Peter Enns, Chief Financial Officer, Chubb Limited: take us maybe a level deeper in the judgment behind lowering loss trends in the quarter.

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: I’m not going any deeper. I I I I’m not gonna put out more numbers than I than I just gave you. It’s I I I think it stands on its own, and it’s informative, Meyer. What can I help you with? What would you like to know?

Peter Enns, Chief Financial Officer, Chubb Limited: So I guess the question that I’m seeing a lot is that the outside, that social inflation is running rampant and there’s a risk of tariffs, which all else equal, I guess, would argue for a higher assumed loss trend rather than coming down a little.

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: Yes. The when you measure it up against where we were, casualty we’re talking, by the way, it’s all the right side of the dust off. So let’s start with that. And on the casualty side, given the blend of business, the loss cost trend in aggregate in long tail is up modestly, tens of basis points. And on the physical side, given the mix of business and what we see, it’s down zero seven points, I want to say, from memory, point 3% approximately.

So, you know, we’re not talking much. And on the physical side, look, I know what our pegs contemplate for loss cost. We’re mindful of tariff, and we will see as we go forward. At the moment, we set our pegs conservatively, and therefore, we don’t see a need to adjust trend.

Peter Enns, Chief Financial Officer, Chubb Limited: Okay. That is perfect. That’s exactly what I was looking for. Second unrelated question, I guess one potential impact of tariffs is that there’s less demand for crops. I’m thinking of soybeans going to China.

What can you do within North American agriculture to ameliorate that impact on this year’s underwriting results?

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: Yes. Right now, if I understand your question, when I look at the we look at the major crops. So let’s take corn and soybeans, that’s the majority of it. We priced our contracts. We priced the contracts.

The government formula sets it in February, and you have a certain going in crop price, price insurance contracts. As you know, yield and price that are the exposure. And right now, actually, corn and soybeans are within a few percentage points of the February pricing. There hadn’t been much change. Beyond that, which I won’t go into any detail on because it’s proprietary, you know that like reinsurance, we use hedging to protect a certain degree of volatility.

And let’s just say we’re mindful of that tool, and and we know how to employ it and doing it.

Eric, Conference Operator: Your next question comes from the line of Alex Scott with Barclays.

Alex Scott, Analyst, Barclays: Hey, good morning. First one I had for you is on casualty. Just seeing the rate continue to accelerate, loss trend also up a little bit. Is the price adequacy getting to the point where that’s becoming a more interesting opportunity? I’d just be interested in your high level thoughts on sort of the direction of that and how much more is needed before you be be more interested in that as a as a big opportunity?

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: You know, I I’ll I’ll repeat what I said. The casualty is getting rate where it needs to get rate. And whether it is large account or it’s in the middle market, we are growing our casualty exposure. And I’m gonna leave it at that.

Alex Scott, Analyst, Barclays: Okay. Second one I have for you is on the reinsurance market. I know it’s not a huge business for you and, you don’t necessarily lean in or lean out the way that some do. But I just wanted to understand how you’re viewing that business, particularly headed into sort of this renewal period and increased capacity that we’re seeing in property more broadly, what would you expect out of that market? And is that still price adequate enough to be something you to be involved in?

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: As a buyer of reinsurance, steady as she goes, and as a seller of reinsurance, you see that we have grown this quarter. It’s more property than casualty related, though we see opportunities in both.

Alex Scott, Analyst, Barclays: Thank you.

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: Thank you.

Eric, Conference Operator: Your next question comes from the line of Robert Cox with Goldman Sachs. Please go ahead.

Robert Cox, Analyst, Goldman Sachs: Hey, thanks for taking my question. I just wanted to circle back to the tariffs. Evan, you mentioned being mindful of the impact tariffs could have on short tail lines and it’s clearly a moving target. Do you have any early sense of the magnitude of the loss trend impact? And I was also curious on how you’re able to incorporate a moving target like that into your pricing strategy today?

Or is that still wait and see?

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: So you know, you you you want to underwrite with facts, and you don’t want to you don’t want to anticipate with conjecture unless you have clarity around your conjecture. Meaning, if you have 70 or 80% certainty as an example, then we would take a certain yeah. There is no clarity at the moment. It is a moving target. The administration has an objective to reach trade agreements for ninety days with a large number of countries.

And what will that mean in terms of tariffs go forward? It’s unclear. I have a stated objective just voiced to have negotiations with China. Knowing China, knowing the complexity of our trade relationship, that will be a protracted discussion. That would not be marked.

Demand, if tariffs remain high, will be impacted. How will that impact inflation? There’s uncertainty around all of that. Now let’s get to some math. When I think about property insurance today and I think about the current accident year, this year, keep in mind, your loss ratio develops on an earned basis.

So a lot of it has already been written. It’s already being earned. It’s already in the can. There you go. As you go forward on a written basis and as months go along, if we see a change in inflation, the markers that will in fact change inflation, we will adjust our pricing in that cohort.

Go one step further. Imagine on the physical side how much comes from Mexico and Canada as an example as influence. What will happen in terms of tariffs in North America and in terms of USMCA negotiations? So on the claims side, all of this is on our minds as we measure the change of price of goods and of labor. And all of it is on our minds as we watch negotiations that will ultimately lead to a more steady and clear environment around what will tariff levels actually be and apply to what goods.

And then there’s a lag time.

Robert Cox, Analyst, Goldman Sachs: Got it. Thank you for all those details. If I could ask a follow-up, I wanted to get a sense of your view of E and S market growth for Chubb. We’ve talked about more competition in E and S property, but there’s also it seems like some secular tailwinds for the E and S market. Would you expect Chubb to kind of continue to grow more in the E and S market versus admitted going forward?

Evan Greenberg, Chairman and Chief Executive Officer, Chubb Limited: I just gave commentary that said we grew E and S at 10%. I explained the property market, the casualty market mixed in all of that. Our discipline in underwriting and what we see as opportunity, we grew E and S 10.1%. I also gave a sense of 80 of our business with growth opportunity. Go forward.

So I’m gonna leave it at that. Thank you very much.

Eric, Conference Operator: I will now turn the call back over to Karen Beyer for closing remarks. Please go ahead.

Karen Byatt, Senior Vice President, Investor Relations, Chubb Limited: 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.

Eric, Conference Operator: Ladies and gentlemen, this concludes today’s call. Thank you all for joining. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.