Chubb(US:CB)2024-01-31 16:59Financial Data and Key Metrics Changes - The company reported a record year with core operating income exceeding $9.3 billion, up 45%, or $8.2 billion excluding a one-time tax benefit, which represents a 28% increase [5][17] - The core operating return on equity (ROE) was 15.4%, while the return on tangible equity was 24.2%. Excluding the tax benefit, the core operating ROE was 13.6% and tangible ROE was 21.6% [6][17] - The book value per share increased by 12.2% in the quarter and 18.2% for the full year, reaching an all-time high of $146.83 [49][50] Business Line Data and Key Metrics Changes - North America commercial P&C, which represents 40% of the company, grew by 7.5%, while the remaining 60% of the company grew by 18% [8] - U.S. high net-worth personal lines grew by 11%, international consumer P&C grew by 18%, international commercial P&C grew over 11%, and life insurance grew by 52% [8][17] - The combined ratio for the year was 95.4%, with an underwriting profit of $146 million in the agriculture business [11] Market Data and Key Metrics Changes - International general insurance operations saw net premiums grow by 19.3% with a combined ratio of 85.9%. Asia led growth with premiums up 37% [23] - Pricing in the retail business increased by over 7%, with property and casualty line pricing up over 10% [12] - Loss cost inflation across the international retail commercial portfolio is trending at 5.8% [12] Company Strategy and Development Direction - The company aims to return to more robust growth in North America commercial P&C, with expectations of strong pricing and exposure changes [10] - The company is focused on maintaining a healthy balance between underwriting income and investment income, which was approximately 50-50 for the year [17] - The company continues to leverage its global diversification to achieve broad-based growth across various regions [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underwriting environment, noting that while there are pockets of elevated loss costs, overall trends remain steady [30][36] - The company anticipates continued double-digit growth in operating earnings through P&C revenue growth and improved underwriting margins [47][113] - Management acknowledged the challenges posed by geopolitical risks but maintained a positive outlook for growth in Asia and Europe [108] Other Important Information - A one-time deferred tax benefit of $1.14 billion was recognized due to changes in Bermuda's corporate income tax law, which will positively impact book value over the next decade [25] - The investment portfolio grew over 20% year-over-year, reaching $137 billion, benefiting from strong operating cash flows [26] Q&A Session Summary Question: What gives comfort that the underwriting environment remains strong despite long-tail loss inflation? - Management noted that while loss costs have been steady, they have visibility on loss costs and believe the underwriting environment remains favorable [30][32] Question: Expectations for North America commercial growth in 2024? - Management refrained from providing specific guidance but indicated that growth rates prior to the fourth quarter were more robust than the reported 7.5% [33] Question: Update on reserve releases in North America commercial? - Management clarified that reserve changes were not connected to underwriting actions and that the loss ratio was not impacted by those changes [59][60] Question: How does the company manage climate change risks in agriculture? - Management highlighted their ability to select risks and operate efficiently due to scale and technology, which helps manage pricing adequacy [88] Question: Thoughts on the E&S market and high net worth business? - Management expressed a preference for admitted markets due to customer convenience but acknowledged the need to use E&S where necessary [90] Question: How does the company view geopolitical risks in Asia and Europe? - Management believes that while risks exist, stability is sought by all parties involved, and they do not foresee a significant conflict [108]