Chubb Limited

Good day and welcome to the Chubb Limited second quarter 2019 earnings conference call. Today's call is being recorded. 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 now.

Thank you and good morning, everyone. Welcome to Chubb's June 30th, 2019 second 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 risks 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. 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 to assist with your questions are several members of our management team. And now I'll turn the call over to Evan.

Good morning. As you saw from the numbers, we had a very good second quarter, highlighted by excellent underwriting and strong premium revenue growth globally and constant dollars that is benefiting from favorable underwriting conditions and our various growth initiatives. In fact, the positive pricing and underwriting environment continued to improve through the quarter and spread to more classes and segments of business. Core operating income was $1.2 billion, or $2.60 per share, down 3% due to modestly higher year-on-year CAT losses. Book intangible book value per share were up 3.2% and 4.7% respectively in the quarter, They're now up 7.7 and nearly 12% for the year, a combination of income and the mark derived from falling interest rates. Our combined ratio of 90.1 included 3.8 points of CAT losses and 2.6 points of favorable prior period reserve development. So on a current accident year basis, excluding CATs, the combined ratio was 88.9%. Phil will have more to say about investment income, book value, CATs, and prior period development. Turning to growth, PNC premium revenue in the quarter in constant dollars was quite strong. Net premiums written grew 6%, with foreign exchange having a negative impact of 1.8 percentage points. The pricing environment continued to firm through the quarter, and we took advantage of some of the best pricing we've seen in years. The rate of increase of prices accelerated, while at the same time, it spread to more classes of business and more classes of risk. Rates continued to firm in the U.S., from major accounts and E&S specialty to the middle market. We continued to observe favorable conditions in the London wholesale market and in Australia. With early signs, firming conditions are spreading to the U.K. company market and certain classes of risk on the continent of Europe and in Southeast Asia. Overall, where rates are moving, they are firming broadly to varying degrees in most all short and long-tail classes. Accompanying price increases, terms and conditions are tightening in certain classes. In my judgment, given some of the market dislocation we have observed, including a reset of risk appetite on the part of some, This firming trend is sustainable and will likely continue to accelerate and spread. It is income and loss reserve driven, not capital driven. Overall prices increased in North America commercial on a written basis by about 7% in the quarter versus a loss cost trend in aggregate of just under 4.5%. Renewal price change includes both rate and exposure. Rate was up 6.3, and exposure a half a point. Pricing improved throughout the quarter in many property and casualty-related areas, including general casualty, both primary and excess, D&O, and professional lines. As more business comes into our underwriting appetite, and price range and other carriers take corrective actions, we are benefiting from a flight to quality, all things being equal, Many buyers prefer Chubb. New business in our North America commercial lines was up over 11% in the quarter, with major accounts and specialty up nearly 15%. Retention of our customers remains strong across all of our North America commercial and personal P&C businesses, with renewal retention, as measured by premium, of 93.5%. In major accounts and specialty commercial, excluding agriculture, premiums were up 7%, with major up 5.5% and Westchester E&S up over 9%. Renewal price change for major accounts was 8.5%, with risk management pricing up 6.3%, excess casualty up almost 10%, and property up 18.5%. Public D&O rates increased 11%. In our Westchester business, renewal pricing was up over 9.5%. Turning to our middle market and small commercial business, premiums overall were up over 4.5%. Renewal retention in our middle market business was 92%. Middle market pricing was up over 4.5%, and if you exclude workers' comp, it was up nearly 5%. Again, this is the best we've seen in a number of years. Middle market pricing for primary casualty was up 4.5%, property 6.5%, excess umbrella up over 6%, and public D&O rates were up 18%. In our North America personal lines business, net premiums in the quarter were down 2%, but adjusting for the expanded reinsurance that we have discussed in the past and an accounting change that impacted growth prior year Net premiums written were up about 2.5%. Retention remained strong at 96%, and for homeowners, pricing was up nearly 10% in the quarter. Turning to our international business, growth accelerated in our overseas general insurance operation, with net written premiums in constant dollar up 9%. FX then had a negative impact of almost 6 points. Net premiums for our London market wholesale business were up over 24%, while our retail division was up 7.5%, with growth led by Latin America up almost 11% and Asia up about 9%. In our London wholesale business, we continued to see a reduction in capacity and rates firming across multiple lines of business. We were also seeing a significant increase in submissions to Chubb. as brokers worry about the continuity of markets as they look to us as a preferred carrier of choice. Overall rates in our London open market business were up over 9%. Property was up 23.5%. Marine cargo, almost 7.5%. Aviation was up 12%, and onshore energy was up 15%. D&O rates in the London wholesale market were up 20%. Our life insurance business at a strong quarter and half year, with a contribution to earnings of $76 million year-to-date. John Keogh, John Lupica, Paul Crump, and Juan Andrade can provide further color on the quarter, including current market conditions and pricing trends. In closing, this was a good quarter for Chubb. We have momentum from affirming market, flight to quality, and our various global growth initiatives. We're achieving rate, which is supporting margins and helping ameliorate exposures we observe on the loss side. In sum, we have some wind in our sails and we're taking advantage of it. Our organization is focused, energized, and hungry. With that, I'll turn the call over to Phil. Thank you, Evan.