Chubb Limited

Good day and welcome to the Chubb Limited First Quarter 2019 Earnings Conference Call. Today's call is being recorded, and if you would like to ask a question on today's call, please signal by pressing star 1 on your telephone keypad. For opening remarks and introductions, I would like to turn the call over to Karen Beyer, Senior Vice President, Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to Chubb's March 31, 2019 First Quarter Earnings Conference Call. Our report today will contain forward-looking statements, including statements relating to company performance and growth opportunities, pricing and business mix, and economic and market conditions, which are subject to risk and uncertainty, and actual results may differ materially. See our recent SEC filings, earnings release, and financial supplement, which are available on our website at investors.chubb.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 supplement. And now, it's my pleasure to introduce our speakers this morning. First, we have Evan Greenberg, Chairman and Chief Executive Officer, followed by Phil Bancroft, our Chief Financial Officer. We'll then take your questions. Also with us today to assist with your questions are several members of our management team. And now I'll turn the call over to Evan.

Good morning. We had a very good first quarter highlighted by good underwriting results, strong premium revenue growth globally, and the best pricing environment in the U.S. and London wholesale market in maybe five years. Core operating income of 254 per share was up 8.5% from prior year. Book intangible book value per share were up 4.3 and about 7% respectively in the quarter. We reported a PNC combined ratio of 89.2, which included 3.8 points of CAT losses and favorable prior period reserve development of 3.1 points, 204 million pre-tax. On a current accident year basis, excluding CATS, the PNC combined ratio is 88.5, simply world class. Phil will have more to say about investment income, book value, CATS, prior period reserve development. PNC premium revenue growth in the quarter in constant dollars was quite strong, and frankly, better than we anticipated in our plans for the quarter. Net premiums grew just over 5%, while foreign exchange, given the strength of the dollar, then had a negative impact of 2.2 percentage points. During the quarter and through April, the pricing environment continued to improve, with overall price change in North America on a written basis equal to loss cost trend. In addition to property, pricing improved throughout the quarter, in many casualty-related areas, including general casualty, both primary and excess, and D&O and professional lines. Renewal price change, which includes both rate and exposure, was up over 5%. Retention of our customers remained strong across all of our North America commercial and personal P&C businesses, with renewal retention as measured by premium of over 94%. In major accounts and specialty commercial, excluding agriculture, premiums were up 4%. Renewal price change for major accounts was 4.8%, with risk management pricing up 5%, excess casualty up 7%, and property up nearly 9%. Public D&O rates increased 5.5%. In our Westchester E&S business, Renewal pricing was up 8%. Turning to our middle market and small commercial business in North America, premiums overall were up about 6.5%, our strongest quarter in terms of growth since the merger. New business was up 13%, and renewal retention in our middle market business was over 91%. Middle market pricing was up 3%, and excluding workers' comp, It was up 4.2. Again, that's the best we've seen in a number of years. For middle market pricing, for primary casualty, pricing was up about 7%. Excess umbrella was up 4.3, and D&O was up 9%. In our U.S. small commercial business, premium revenue continued its positive growth momentum, with net premiums up over 40%. In our North America personal lines business, net premiums written in the quarter were up one. Adjusted for the expanded quota share session we discussed last quarter, net premiums were up about two and a half. Retention remained quite strong at over 96%. With homeowners, pricing was up over 8% in the quarter. Turning to overseas general insurance operations, we had reasonable growth. which we expect to accelerate as the year moves along, particularly in Asia. Net premiums written for our international retail division were up 5.7% in constant dollar. And FX then had a negative impact of 5.8 percentage points. Growth was led by Latin America, with premiums up almost 13%. While premiums in Europe were up 4.2%, and Asia was up 4%. or 8% adjusting for a one-time positive item last year. International growth in the quarter was driven by both commercial and consumer lines. Consumer lines were up 6%, personal lines were up 5%, and driven by Latin America, growth of 17.5%. And A&H was up 5%, driven by double-digit growth in both Latin America and Japan. Net premiums for our London market wholesale business were up nearly 15% in the quarter in constant dollar. As I noted last quarter, this business is growing again on the back of improved pricing after several years of shrinking. Pricing conditions in our international retail and London wholesale businesses varied by line and by country. Overall rates in our retail were up 2%. While rates in London wholesale, open market business were up over 8%. Property up over 8%, financial lines up 13%, and marine up about 6.5%. And finally, aviation up 18%. John Keogh, John Lupica, Paul Crump, and Juan Andrade can provide further color on the quarter, including current market conditions and pricing trends. Since the beginning of the year, we have completed a couple of important transactions. that represent important opportunities which will feed growth in the future. In January, we entered into a 15-year exclusive distribution agreement with Banco de Chile, the largest bank based in that country. We will distribute life and general insurance products to their customers throughout their branches, telemarketing, and digital channels. Banco de Chile has a long track record of successfully marketing insurance to its more than 2 million banking customers. In March, we received approval to increase our ownership in Watai Insurance Group, the holding company of PNC Life and Asset Management subsidiaries. Watai Group's insurance operations have more than 600 branches and 11 million customers. With our increased stake, Watai Group became the first domestic Chinese financial services holding company to convert to a foreign invested joint venture. Our increased ownership is an important milestone towards our future goal of majority ownership. In closing, we're off to a good start to the year, achieving increased growth in many of our businesses globally, and momentum continues to build. A benefit of our broadly diversified presence and capabilities We are experiencing continued and even accelerated pricing increases. With that, I'll turn the call over to Phil, and then we're going to come back and take your questions.