Chubb Stock

Thank you for standing by. My name is Jerrill, and I will be your conference operator today. At this time, I would like to welcome everyone to the Chubb Limited Second Quarter 2026 Earnings Call. [Operator Instructions]

I would now like to turn the conference over to Susan Spivak, Senior Vice President, Investor Relations. You may begin.

Thank you, and welcome to our June 30, 2026, second quarter earnings conference call. Our report today will contain forward-looking statements, including statements relating to the company's 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. See our recent SEC filings, earnings release and financial supplement, which are all 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 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 Chris Hogan, our Chief Investment Officer. Then we will take your questions. Also with us today to assist with your questions are several members of our management team.

And it's now my pleasure to turn the call over to Evan.

Good morning. We had a very strong quarter. The results speak to our strengths and competitive profile, the health of our balance sheet, the growth of our invested asset and the diversification of our businesses globally with the opportunities they present, all set against our disciplined approach to underwriting.

Strong P&C underwriting, investment and life income results led to core operating earnings of $2.8 billion or $7.26 per share, up 14.6% and 18.2%, respectively, over the prior year. Our most important measure of shareholder wealth creation, tangible book value per share is up 17.1% year-over-year. Our annualized core operating return on tangible equity was 21.2% for the quarter, and core operating ROE was 14.5%.

P&C underwriting income was more than $1.9 billion, up almost 19%, with a combined ratio of 83.8%. On a current accident year basis, excluding CATs, the combined ratio was 82.2%.

On the investment side of our business, adjusted net investment income was a record $1.88 billion, up more than 11%, supported by excellent performance in our fixed income and alternative asset portfolios. The fixed income portfolio yield was 5.1%, and our current new money rate averaged 5.5% as of June 30. Our invested asset now stands at $175 billion, up from $161 billion a year ago. Life income of $332 million was up 9%.

As you know, we are well diversified globally by geography and product and by the type of customer we serve in both commercial and consumer businesses, and we are well diversified by distribution channel, reaching customers the way they want to buy. Our pattern of growth speaks to this. The substantial majority of our businesses are growing with the balance flat or purposely shrinking due to inadequate pricing or terms. The most obvious and visible example of this is U.S. large account and E&S property, where we again shed a significant volume of premium.

Property aside, the vast majority of the balance of our businesses in the U.S. and globally are growing at various rates, some faster, some slower, market and macro conditions dependent, including personal lines, small and middle market commercial, A&H, life, and even large account business, excluding property. Peter is going to have more to say about financial items.

Looking more closely at growth, pricing in the rate environment, global P&C premiums were up 3% or 6.3%, excluding large account and E&S property. Overseas general grew 10.2% or 4.8% in constant dollar. North America was up about 0.5% with commercial down 2.3%. While personal lines and ag were up each 6%. Commercial was up 4.1%, major in specialty property again aside.

For context and observing from a broader perspective. Soft market conditions have begun to spread beyond property to more casualty lines, particularly E&S. So those certain classes of large account, middle market are growing more competitive. Pricing in certain areas -- in numerous areas of casualty are failing to keep pace with loss cost, which are hardly benign. Keep in mind, U.S. casualty loss costs are rising at a pretty steady 6% to 7% for primary, casualty and 9.5% to 12% for excess. And that's per year, and it varies by class of business as to whether it's rising 6% or 7% or 9.5% or 12%.

Pricing becomes marginal or inadequate pretty quickly when you're running those kinds of loss cost. In the meantime, financial lines continues to be soft. And here, we notice an unsurprising pattern, where experience large companies are much more disciplined and rational while naive newer players particularly financial lines, MGAs and smaller companies are underwriting in prices and terms that are inadequate. In fact, of late, we've observed broker securing coverage terms from these markets that experienced underwriters discontinued 20, 25 years ago and for good reason.

Again, from Chubb's perspective, while all of this impacts us, we are so well diversified that it has relatively and absolutely less impact overall. With that as a baseline, I'm going to give you more color on the quarter by division and region.

Our international Retail business, which produces more than $17 billion in gross premiums annually, operates in 51 countries and is about 90% of our overseas general division, and it grew almost 12% in the quarter or about 6% in constant dollar. Consumer-related businesses, both A&H and Personal Lines were up more than 12% with commercial lines up over 11%. Latin America grew 15.6%. Asia grew 12%, Europe grew nearly 7.5%.

In our London wholesale business, the market is highly competitive. And not only in property, it's worth noting that London is actively writing U.S. casualty for the last few quarters, a movie we have seen before. The volume is growing, and it rates in terms that can only end one way. There's a reason U.S. casualty is going to London, and it isn't due to a lack of capacity in the United States.

Premiums in our London wholesale business, which is about 10% of international P&C were down about 1% in the quarter.

In North America Commercial, premiums on our middle market and small commercial division grew almost 9%, with P&C lines up 12% and financial lines down about 3%. This is a powerhouse franchise, which produces more than $9.5 billion in gross premiums annually with a vast geographic footprint and broad product capability, serving small and midsized companies of all kinds from a wide range of industries.

Premiums in major accounts and specialty or E&S, declined 9% in the quarter because of property. In North America, pricing for commercial property and casualty, excluding fin lines and comp was up 1.3%, with rates down 1.4% and exposure change of 2.7%. Property pricing was down about 6%, with rates down 10.5% and exposure up 5.2%.

But going to step further, property was -- pricing was down 12% in shared and layered, major in specialty for the business we wrote. Market pricing for the business we gave up or passed on was down around 40%. In middle market and small commercial, property pricing was up 2.3%.

Casualty pricing in North America was up 7.1% with rates up 6.4% and exposure of 0.7%. And fin lines pricing was up 0.3%. On the consumer side of North America, our high net worth personal lines business, the clear market leader in that category had a really good quarter with premium growth of 6% and renewal retention on an account basis of 90%. Our North America Personal Lines business is now more than $8 billion in gross premiums annually.

In our international life insurance business, premiums and deposits rose almost 14.5%. The vast majority of our life exposure, as you know, is in Asia. And the majority of our growth is in North Asia, meaning China, Hong Kong, Korea and Taiwan. Premiums in our North America Chubb Worksite Benefits business were up 14%. Our Life division produced $332 million of pretax income in the quarter, up 9% from last year.

The Life division now produces annual premiums of over $8 billion. Five years ago, it was $2.5 billion. Our diversification, presence and capabilities globally and our operating discipline provide us with continued growth opportunities and resilience. This quarter's results add to a long track record that demonstrates we are a consistent compounder of wealth or an all-weather firm. We have many sources of opportunity on both the liability and the asset side of the balance sheet, and we are patient. CATs and FX aside, I'm confident in our ability to continue to outperform and to generate strong growth and operating earnings and EPS and most important, double-digit intangible book value, our most important indicator of shareholder wealth.

I'll now turn the call over to Peter, and then will come back, and we're going to take your questions.

Thank you, Evan, and good morning. We had another strong quarter led by our P&C divisions globally, growing Life business and strong investment performance, all of which further strengthen our financial position, including invested assets of $175 billion and $3.5 billion of adjusted operating cash flows.

There are a few capital related matters I'd like to touch on. First, we issued $2.2 billion of debt across a few currencies at a weighted average cost of 4.2% at an average term of about 7.5 years. The use of proceeds is for general corporate purposes, which includes the repayment and refinancing of debt.

Secondly, in May, our Board authorized a new $7.5 billion share repurchase program that took effect on July 1 with no expiration date. In the quarter, we returned $1.4 billion of capital to shareholders including $979 million in share repurchases at an average price of $327.18 per share and $395 million in dividends. We ended the quarter with an all-time high in book value of $75 billion or $195.45 per share.

Book and tangible book value per share, excluding AOCI, grew 2.8% and 3.8%, respectively, for the quarter and 11.4% and 15.8% from last year. Pretax catastrophe losses were $475 million for the quarter, principally from weather-related events in the U.S.

Prior period -- pretax prior period development in the quarter in our active companies was a favorable $441 million, split 89% short tail lines and 11% long tail lines. Our corporate runoff portfolio had adverse development of $158 million with over 2/3 of that coming from molestation-related claims development.

Our paid-to-incurred ratio for the quarter was 90%, and our net loss reserves increased to nearly $69 billion, representing a growth of 4% from the second quarter last year. Excluding CATs PPD and agriculture, our paid-to-incurred ratio was 86%.

Our core operating effective tax rate is 19.2% for the quarter, which is below our previously guided range due to shifts in the mix of income and discrete tax benefits related to equity awards and certain investments. We continue to expect our core operating effective tax rate for the full year to be in the range of 19.5% to 20%.

Turning to investments. Our A-rated portfolio increased about $2.5 billion in the quarter to $173 billion and is up 14.3% or 9% over the last 12 months, supported by approximately $16 billion in adjusted operating cash flows. Adjusted net investment income of $1.88 billion was above our previously guided range, primarily due to strong growth in the invested asset base and higher-than-projected private equity income.

To give you a bit more color on investment income and the portfolio, I'll turn it over to our Chief Investment Officer, Chris Hogan.

Thank you, Peter. Good morning, everyone. Our public fixed income portfolio generated $1.63 billion of income in the quarter, up 12% year-over-year. And our private investments, which make up 12% of the portfolio, contributed $250 million of income, up 9.5% year-over-year. Our fixed income portfolio will continue to generate consistent and growing quarter-to-quarter income. And as we thoughtfully grow our private investments, Income from that book, while more variable, will continue to trend higher over time.

This is an ideal environment for investment-grade bond investors. Our reinvestment rate of 5.5% is a structurally attractive level, sitting well above the portfolio's book yield of 5.1%. The portfolio and insurance operations continue to generate excellent cash flow that we're investing at yields that both compound book value and drive significant income growth.

Financial assets in many markets are expensive and price of perfection. At the same time, longer-term yields remain exposed to structural pressures, rising federal deficits, corporate credit demand, persistent inflation and the potential for foreign rotation out of USFS. These forces may lead to higher yields, wider credit spreads and pressure on risk asset valuation. We remain disciplined and focused on risk-adjusted returns, maintaining a substantial balance of high-quality, liquid investment-grade assets and the conservative duration. This positioning is central to our current strategy. It will allow us to move quickly to take advantage of market dislocations as opportunities develop.

I'll now turn the call back over to Susan.

Thank you. At this point, we're happy to take your questions. Operator, please open up the line for questions. .

[Operator Instructions] Your first question comes from the line of Matt Heimermann of Citi.

A couple of questions. First question is just international Life and Accident & Health. There was some regulatory decrees, changes in Singapore on deductibles for accident health and then investor-related products in Hong Kong for Mainland China visitors. I'm just curious if there was any impact in the quarter or any product redesign required.

Sorry, they were playing with the buttons here for a second, Matt. Can you just repeat the question itself?

Sure. So -- in Singapore, there were some regulatory changes to deductible levels for accident health products. And in Hong Kong, obviously, there was a decree related to investment products for Mainland China visitors. I'm just curious whether or not those had any material impact on flows in the quarter, if there's any need to change product design at all to address those?

No, I'll keep it simple. No. There was no impact. We don't write that kind of accident and health that you're imagining in Singapore. Remember, we write supplemental health. We don't write traditional major medical and typical hospitalization. That's not our business. And that's with the Singapore decree that you referenced was about. So no impact to us there. It's not our game.

And in Hong Kong, on the flows, the -- I think there's an overreaction. First of all, we did not have an impact. And I don't expect an impact on Chubb going forward. I think there was a an overreaction to the government and the regulator pronouncements and actions they took, they were really around, what I'll say, bad actors those who were using the system and the rules that are in place that allow capital flows north to south and allow for investment products in Hong Kong.

And then just one follow-up. Taking a step back, you have got pretty sober views of market conditions. And I would say that's a pretty consistent perspective that I think you bring to looking at the market. I guess how -- and I would say, increasingly that feels a bit different in terms of potentially prospective views on profitability from some of your other competitors. I'm curious what they see that might be different than what you're seeing and just how you're thinking about the distribution of outcomes as it pertains to the market today?

Yes. I can't -- I'm not in the heads of others, and I don't know what they're specifically looking at. We all face the same market conditions. And we all face the same realities. And so I'm just going to -- I think it's just best as you see it. I mean, this is what it is. And the results, people can use words, but the results speak for themselves. And I'm very confident in spite of market conditions, which market is the market. In Chubb's ability to continue to produce outstanding results and to outperform just given our -- which we've purposely built over so many years on the breadth of diversification globally and within product and commercial and consumer that really despite commercial P&C conditions gives us that leg up to outperform. So I'm going to call it as I see it. And I can't speak to what others are thinking or out to...

Your next question comes from the line of Meyer Shields of KBW.

In North America Commercial, it looks like ceded premiums were up a little bit more than 20% year-over-year. I was hoping you can give us a little color on the nature of the increasing reinsurance spend and where we would see that in future results?

Yes. First of all, it's a variation just -- it varies by line of business and so there's some mix involved in there. But in certain areas, we are purposely reinsuring a bit more. You could imagine that in property. You can imagine that in certain areas of fin lines, as we've said before. And of course, we are. And if there's a hungry market at times may rationally makes sense to us to feed the hungry.

Okay. No, fair enough. Second question, maybe taking a step back. You've talked a lot about the upside of diversification. With having a much bigger base of written reinsurance premiums be of strategic benefit?

You mean to grow our reinsurance business?

Yes, either to grow it or to buy a reinsurance.

I'm sorry?

Or to buy a bigger reinsurance platform than you currently write?

No, it makes -- I mean I could have back it further to your buyer, but I think you get it no, that don't make any sense. Our flat book goes in the other direction.

Your next question comes from the line of Bob Huang of Morgan Stanley.

My first question is on the overseas general insurance. If we look at the accident year loss ratio over, call it, the past 5 quarters, it's been improving fairly steadily. I think part of the press release talks about business mix in that business is improving. Is it right to think that as you grow the Asia and LatAm business faster than the European business, should we see like a natural improvement on accident year loss ratio? Is that the right way to think about it? I'm curious your thoughts on that.

Yes. The trend of improvement that you note is a trend, and it is a consequence of mix of business, okay? Consumer -- and then within commercial and consumer is accident It's -- and a variety of personal lines, from auto to specialty personal lines, depending on the country we're in. And then within Commercial, a greater mix shift towards mid and small than large -- I think the way though, that you think about geography is not exactly right. I would think within more of product, as I said it, we're growing mid and small in parts of Europe in a meaningful way. We're growing it in Latin America, not to the same degree. You got another Latin American countries, the volatility in the CAT exposure. And we're growing in Asia, of course.

And so I wouldn't think about -- I agree and you just get what I just said to you, everything except, okay, Asia, Latin America versus Europe, I would disabuse you of that part.

Okay. Really helpful. My second question is on North America personal lines. Obviously, your personal line is different from everybody else's. And a lot of a lot of personal line carriers are seeing pricing pressure. You're not really seeing that. Like how durable is your rate environment in your particular part of the personal line business? Can you maybe help us think about just the industry dynamics for your specific target market?

Yes. First of all, I think most of the discussion that you're engaged in around personal lines in the United States is general market auto. And that is -- we're not active within that. And then to a degree, but a much lesser degree, general market homeowners. We are in the high net worth business where it is far more about the richness of coverage and the services you're capable of providing and the broad range of product because this is a spectrum of high net worth customer. But the complexity of their insurance needs is the hallmark regardless of where you are in that spectrum, and your ability to underwrite it. And then, yes, to price it under manage it.

And then the other part of it that is just people miss is, they buy for the claims service. And the richness of the claims service that you provide, it's not a matter of did you just pay them an amount of money because they had a loss. They want to be put back in the condition they were in before the loss. Imagine an antique home. Imagine a specially designed home in a CAT-exposed area gets very expensive, very technical, hard to manage. I imagine they're live, the sensitivity around their liability claims. They're buying for a lot more than price. And your ability to get paid adequately, we've improved. And if you look at our loss ratio over years, not simply about rate increase. It's the complexity in our actual rating algorithms and our risk selection and applying rate against exposure in a far more sophisticated manner. And by the way, that's one example of use of technology, and that continues to evolve and will continue to evolve. So I feel quite confident and -- in the future. And by the way, I am the biggest fan of this wonderful franchise that we have.

Your next question comes from the line of Tracy Benguigui of Wolfe Research.

It feels like there's a lower barrier of entry in a way for large accounts since London insurers are getting into U.S. casualty, MGAs are disrupting property. So maybe a higher barrier for small to middle market in a way where small commercial, you really need a strong field operation set up. Is it fair to say that's something you inherited from legacy Chubb? And since you had such remarkable growth in small to middle market this quarter, can you touch on the strength of your field operations or onto something regarding that competitive moat?

Thank you. And Tracy, thanks for the question. Inherited from legacy, Chubb. When we put Chubb together, which is about 11 years ago now, it was putting together, in essence, a brokerage, large account, specialty, player, and I'm restricting that to the United States because it was a global player and with large accident and health and growing personal lines with an agency-based middle market, small -- much less small, but middle market and specialty and high net worth player U.S. dominated. And the ability to put those two together, agency and brokerage, very different cultures together under one roof and have one unified strategy and one benefit from the other, which each brought skills to the table, that was the thesis. And frankly, I think it's proven. Its proven just to be a wonderful combination in what a powerhouse franchise.

And mid- and small -- and we've grown small, have benefited significantly from that, broadening the product capability of that agency business. Broadening our appetite and our ambition to move into small commercial and lower middle market, mixing of skills of people between the two that has just furnished that franchise. Our branch operations and the reach that you referenced, but along with technology, as it takes hold and emerges, it allows us to reach in a cost-effective way, the broadest range of distribution, not just the very large players in distribution who are our important partners with all forms of distribution, small brokers and agents and to do it effectively. Our own in-house wholesaler that can serve us on their behalf. All that is coming to play. And then with technology, our ability and one of the hallmarks of Chubb, we are the pioneers of it, industry practices.

We actually, in the middle market, deliver discrete product, discrete coverages that are tailored to actually the needs of very specific industries. It's not some marketing And where people are trained to be expert in that area where engineering is trained to be expert in that area and to focus on those industries along with product, along with the distribution reach, that's what creates this unique powerhouse in mid and small. And there are only a few of us who have that capability.

Excellent. You also unpack your comments a bit more on soft market conditions spreading to certain areas of casualty plus my own observation. It feels like hard pricing really is a commercial auto story as excess casualty also includes auto. Do you share that view?

I didn't -- not sure I understood the last part of what you just said. You said, comment on casualty. And then you said something about hard market and auto.

Yes. Okay. Sorry, let me just rephrase. So the areas that we're seeing the most harding on casualty is either commercial auto or excess cash casualty and within excess casualty that also includes commercial auto. So I'm curious if it's really a commercial auto story on the pricing side for casualty.

No. It's across casualty. I -- my comment about casualty stands that numerous areas not all, but in most areas of casualty. Rate is, at this moment, not keeping pace with loss costs and impact loss costs. And this notion that somehow loss costs are becoming more benign, I'm not sure where that, that notion comes from, but it seems to me to just be talk. There is zero evidence across the industry that the loss costs have abated. They're continuing to flat at a steady rate. And I think there's an issue in the minds of maybe in the investing community that somehow steady means proving they're not accelerating, but they're increasing at a steady rate -- confuse of the two. And then what the results look like by -- in casualty, well, varies by area of the business, et cetera. And whether there's room or there's not room and to be more competitive in that, I won't go any further than that.

Your next question comes from the line of Rob Cox of Goldman Sachs.

I just wanted to ask on small and middle. I'm just curious, I noticed the growth acceleration in the quarter. Curious if you feel like technology is breaking down any of the historic incumbent advantage in that market?

In which market?

Small and middle.

Small and middle. Whether technologies -- look, I think that technology, but data and scale and size and breadth of capability that brings you an insight is a competitive advantage. And I think it's a competitive advantage that these things play out over years, and I've said it before, I think it's a -- that's a structural, secular advantage.

Got it. And then I just wanted to ask on Europe. I think the growth was a little bit lighter there this quarter. Is there any economic disruption that you see kind of expanding out from the Middle East conflict that worked into those numbers? And just curious if you could size how you're thinking about underwriting risks and potential opportunities from the Middle East as well?

Yes. I am -- no, to answer your question directly, I don't notice an economic impact from the Middle East that impact the quarter. The quarter was just variability. And based on competitive market and London versus the continent, less so, large versus mid and small and just the mix of all of that and variability in the quarter. And looking out, I remain and I'm quite bullish on our opportunities in Europe. We've got a large installed base. We have numerous areas of strategic focus that we are actively engaged in, and we're just beavering away growing the business. And we have an outstanding business on the continent and in the U.K., going far beyond a London wholesale business.

Your next question comes from the line of David Motemaden of Evercore.

Just a question on the loss cost trends in North America Commercial. So I heard you on the long tail lines. It doesn't sound like you've changed anything there, still being conservative. I'm wondering what you're seeing on the shorter tail lines. The favorable development has been pretty strong there. And -- are you thinking about making any changes there potentially? I'm just sort of looking at some of your peers potentially making changes there.

Yes. Shorter tail, it's steady. We're not seeing a change. It's bouncing around the 4.5%. And that is pretty steady. The only thing I'll tell you about the long tail -- cited those are conservative numbers. Those are actual trends as we observe them. Longer term and shorter term, and we got a lot of data. And by the way, we triangulate it with those who observe industry. They're not specific to job.

Got it. That's helpful. And then maybe just on just sort of looking at the stellar accident year loss ratio ex CAT within North America commercial. I mean you guys had called out, I think, in the 10-Q last quarter, just the adverse mix impact just from less property as driving that deterioration. I guess I'm wondering is -- as we see the mix shift more towards middle market should that have a bigger offset as we go forward, just sort of thinking about the margins here, which remains stellar, but obviously, the pricing is under pressure?

Yes. Let me answer it like this to you, combined ratio. For Chubb, and let's look at Chubb, our combined ratio, it's a hallmark. It's an expression of who we are. We're an underwriting company. Volatility aside, CATs and large events. Our combined ratios are sustainable, obviously, within a reasonable range of variability, but they're sustainable. That's the beauty of the size and scale of the company. Our diverse portfolio of quality businesses, our underwriting focus. And that's within North America and then more broadly across job. That's the whole point. The bigger the portfolio, the greater the diversification of it, the less variability and the greater the stability of it overall as you start breaking down into this little piece or that little piece, then variability becomes greater. And then add to that, our employment of TAC and AI and the insights and efficiencies we are and will gain and those also support combined ratio. So I feel confident about it.

Your next question comes from the line of Gregory Peters of Raymond James.

A couple of things, both in your press release and in your comments -- you talked about how you're confident in the ability to outperform and generate strong growth in operating earnings and EPS and double-digit growth in tangible book value. With the pricing competition that you're talking about and its effect on your top line, maybe you could sort of bridge the gap on how you think the organization is positioned to continue to generate strong EPS growth.

Absolutely. And I am aware and mindful of the chatter since last night around the one word change we made. It really is Kremlin watchers. And so let me take all that, Rapid create the right context here. Look, for many quarters, including the first half of this year, I'd start with that, we've produced double-digit EPS growth. This quarter alone, over 18%, simply outstanding. My outlook statement is not guidance. And it's looking out beyond the next few quarters to simply give a directional sense over the longer period. And so when you take that, given market conditions, we've simply broadened the range of outcomes modestly, and they include double digit, by the way, within that, of EPS. Softening commercial P&C market conditions balanced against our global mix of businesses, including our mix of business within North America, think mid and small commercial, personal lines, our vast international and consumer, our life, our invested asset and our capital management. We have many sources and handles to pull. I am quite confident. In fact, I am confident in our ability to produce very strong and potentially double-digit EPS growth and will produce strong earnings growth as we go forward.

I've asked this question of one or two others, and I think it's appropriate for your company as well. There's been a bunch of stories that have hit the press over the last couple of months about the rising cost of technology thinking about token costs and things like that. And with quite an impact on the market, you spoke last year about using technology to generate material savings for your organization over the middle term. So I'm just curious how you can reconcile for us the rising cost of technology deployment versus the ability to harvest those savings and generate improving margins?

Yes. First of all, the chatter that you've been reading about, what you've been reading I think the investing community broadly ought to put it in context. It's more that token usage is really about the vast token usage among tech companies. And those that are AI and tech companies. They use vast amounts in model development. That's not applying -- that comment is not really applying to general businesses. We know our token usage. We know our token costs. Frankly, it's within our economic model and how we measure expenses. Our token costs and the usage that way is a fraction, a minor fraction relative to the efficiencies and the insights and the improvements that we gave, and we measure it in hard dollars. This is not...

Your next question comes from the line of Andrew Kligerman of TD Cowen.

So looking at the net written premium, you mentioned that there's continued softness in financial lines and flat to down pricing we're seeing in workers' comp yet. Financial Lines net written was up 2.6% and work comp up 6.2% net written. So I'm kind of curious where you might be seeing the opportunities in those lines and that you're confident in the performance going forward there?

Sure. First of all, in comp, remember, we play up and down the stack from a large company where we are a market leader, mid and small where we are market leaders. And -- so it will vary by state, by industry, by type of business. And so its selection within there. And exposure changes, I think payrolls, thick number of employees those bounce around and that improved -- that adds or subtracts from your premium revenue growth each quarter.

In financial lines, financial line is a broad set of businesses. And there, again, we play in very large count, and we play in small and mid. And it's not just public D&O, it's private D&O. It's not for profit D&O. It's E&O. And a lot of broad classes of E&O, Fidelity, which is a form of surety, but different than that. Fidelity is part of financial lines. And we put cyber is part of our wrap-up in financial lines. So it's across a broad range, while we've been -- and I've been vocal that not-for-profit, private D&O is very soft and overly soft where the underwriting doesn't make sense and pricing. There are other areas where it remains adequate, and -- it's up and down. It's up and down the street. It varies.

Yes, very much so. The diversification is really helping there. And just looking at your Chubb Benefits business, which is relatively small portion of life, but it was up 14%. So do you -- Evan, do you kind of see this business just continuing to grow organically? Or is it something that you think might need some inorganic investment to kind of accelerate it?

Look, we've been added in a steady way for over 5 years now. And thank you for that question. It divides into two pieces. Chubb Benefits, the part that works very closely in the -- through the brokerage distribution with our -- predominantly with our mid- and small P&C commercial colleagues where we're selling in all lines, and that is very successful way of distributing. And then secondly, the old combined agency force, we retooled it and it is selling. It is predominantly focused on small and lower middle market companies to sell worksite benefits and install them. We've invested a lot in distribution, in product, but particularly in technology and our ability to deliver product and service it right at the desktop of individual employees and to do it in a frictionless way.

We're focused on growing organically. We just see a tremendous opportunity to continue growing that business at double digits, and that's our focus.

And you know what, over time, as I look at it over the next number of years, it will emerge as a more significant contributor to Chubb's results top and bottom line.

Your next question comes from the line of Alex Scott of Barclays.

I'll ask one on the you incurred. I think for the pandemic average something in the high 90s. Just looking at and it's still running at 90. I know some of that's from a bit more growth than just a natural lag. But -- could you talk about why that would be running [indiscernible]

I'm just talking about overall incurred. And just your views on why that's still kind of continuing to run well below historical levels.

Why it's continuing to run as it is?

Yes. Just the fact that it's running at 90 versus I think pre-COVID was, I think, averaged around 97. So I'm just trying to understand...

I think that's excellent. It speaks to overall the strength of our reserves.

Okay. All right. Next one, capital. You didn't talk as much about the excess capital this quarter. But I mean you guys have had stellar earnings. Obviously, it's building. How should we think about the current levels there and the different options you're looking at for deployment and what that could be to the EPS growth that we're all focused on?

Sure. I'll take that one. It's Peter. Look, nothing's changed in our framework. We're deploying capital accretively and underwriting and investments. We'll continue to return capital through dividends, repurchases. You've seen us do that over time, balanced by opportunities. So nothing's really changed.

And that's all the time we have for our Q&A session. I'll now turn the conference back over to Susan Spivak for closing remarks.

Thank you, everyone, for joining us today. If you have any follow-up questions, we'll be around to take your calls. Enjoy the day. And again, thank you.

Thank you. That concludes today's conference call. You may now disconnect.

Thank you for standing by. My name is [ Gail ], and I will be your conference operator today. At this time, I would like to welcome everyone to the Chubb Limited First Quarter 2026 Earnings Call. [Operator Instructions]

I would now like to turn the conference over to Susan Spivak, Senior Vice President, Investor Relations. You may begin.

Thank you, and let me add my welcome to our March 31, 2026 first quarter earnings conference call. Our report today will contain forward-looking statements, including statements relating to the 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.

See our recent SEC filings, earnings release and financial supplement, which are all 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 release and financial supplement.

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. Then we'll take your questions. Also with us to assist with your questions are several members of our management team.

And now it's my pleasure to turn the call over to Evan.

Good morning. We had an excellent quarter and start to the year. Our results speak to the strength and resilience of our company in a period of elevated uncertainty. They also speak to our globally diversified business opportunities on the one hand and our disciplined approach underwriting on the other.

I want to first start with a few words about the external environment. War in the Middle East raises the specter globally of higher inflation and potentially slower economic growth. To what degree, the timing and the pattern are all unknowable at this time. However, the impact of the war adds a degree of pressure to certain financial, fiscal and economic stresses, such as underlying inflation, fiscal deficits and sovereign debt, global supply chains and financial valuations, including equity and credit and a growing energy shortage to name a few. In times of stress, I like Chubb's position. Given the strength of our balance sheet, earning power and liquidity.

Now turning to our results, strong growth in P&C underwriting, investment and life income led to core operating earnings of $2.7 billion or $6.82 per share, both up substantially over the prior year first quarter, which was, of course, impacted by the California wildfires. Adjusting for this, so excluding cat losses, core operating income was up 10.7% and EPS was up 13.5%. And most important, tangible book value per share grew 21.5%. Total company net premiums grew 10.7% for the quarter to more than $14 billion. P&C premiums grew 7.2% and Life grew more than 33%, both benefited from foreign exchange. Our underwriting performance in the quarter was excellent. P&C underwriting income was $1.8 billion with a combined ratio of 84%. And on a current accident year basis, excluding cats, underwriting income grew 9.8% and a combined ratio of 82.1%.

On the investment side of our business, adjusted net investment income of $1.8 billion was up more than 10%. Our fixed income portfolio yield was 5.1%, and our current new money rate average was 5.5% as of March 31. Our invested asset now stands at $170 billion, up from $152 billion a year ago. Again, these results, top and bottom line, put a point on the broad-based, diversified nature of the company by geography and product by both commercial and consumer customer segments and by distribution channel. Our annualized core operating return on tangible equity was 20.6% and our core operating ROE was 14%. Peter is going to have more to say about financial items.

Turning to growth, pricing and the rate environment. P&C premiums grew 7.2% with consumer up 14.2% and commercial up 4.6%. Overseas General grew 14.4% or 6.1% in constant dollar. Total North America was up 4.1% or 7.8%, excluding large account property both admitted and E&S, which we purposely shrank given what we judge to be inadequate pricing levels in a number of important markets, property and financial lines pricing conditions are soft, with property pricing in those markets softening in a pace that, frankly, I'll only describe as dumb.

With that, as a baseline, I'll give you some more color on the quarter by division and region. I'm going to begin, as I did last quarter with our international P&C business. Premiums in our international retail business, which operates in 51 countries and is 90% of overseas general were up more than 15%. Consumer-related premiums, both Accident & Health and personal lines were up over 20% with commercial lines up over 11%.

Europe grew 17.5% with consumer and commercial both up double digit. Asia grew more than 12% and Latin America grew almost 18%. In our international retail commercial business, P&C rates were down 2.5%, and financial lines rates were down 7.4%. Our selected loss cost trends and our international retail business was 3.7% or 130 basis points lower than '25%. In our London wholesale business, the market has become highly competitive, particularly but not only in property, and we purposely shrank our open market property business. Premiums in our London wholesale business, which is 10% of international P&C were up almost 8%.

Turning to North America. Total premiums again grew 4.1%, including 8.3% growth in personal lines and 2.8% in commercial. excluding large account property, both admitted and E&S, and that's shared and layered property. Total North America commercial premiums rose 7.7%, a very good underlying result. Breaking it down further, premiums in major accounts and Specialty or E&S grew 1.5% or 10.9%, excluding Sheraton layered property, which again, we shrank. Growth was driven by a broad range of casualty, marine, surety and risk management businesses.

Premiums in middle market and small grew 3.3% with P&C lines up almost 5.5% and financial lines down 5.7% or flat when adjusting for the impact of just additional reinsurance we chose to purchase. In North America, pricing for commercial property and casualty, excluding fin lines and comp was up 4.6%, with rates up 2.2% and exposure change of 2.3%. Property pricing was down 2.6%, with rates down 6.3% and exposure up 4%. However, going a step further, Property pricing was down 14.3% in shared and layered major and specialty for the business we wrote. Market pricing for the business we gave up or passed on was down between 30% and 40%. The larger the premium, the greater the price discount.

On the other hand, in middle market and small commercial, property pricing was up 1.5%. Casualty pricing in North America was up 9.6% with rates up 8.4% and exposure of 1.1%. Work comp pricing was up 4.3%, and fin lines pricing was about flat. Our overall selected loss cost trend in North America commercial was little changed, with no change in casualty at other long-tail lines.

On the consumer side of North America, our high net worth personal lines business had a very good quarter with premium growth of 8.3% and renewal retention on an account basis of 92%. Homeowners' pricing was up 7.7% in the quarter. And in our international life insurance business, premiums rose 37%. Premiums in North America Chubb Worksite Benefits business were up almost 16%. Our Life division produced $316 million of pretax income in the quarter, up 8.5%, and adjusted for a few onetime items that benefited last year's first quarter life was up 11.5%.

In sum, we're off to a very good start in '26. And we had an excellent first quarter. From a macro perspective, over time, difficult environment, generally advantage, strong companies over weaker ones. Chubb's diversification, market-leading presence and capabilities and operating discipline provide us with resilience when the macro environment is uncertain. We are patient and have many sources of opportunity on both the liability and the asset side of the balance sheet. From what I can see, cats, et cetera, aside, I remain confident and our ability to continue generating strong growth in operating earnings and double-digit growth in EPS and most important tangible book value.

I'll turn the call over to Peter, and then we're going to come back and take your questions.

Thank you, Evan. Our first quarter results were strong, and we concluded March in an excellent financial position. Supported by balance sheet strength and liquidity, including record cash and invested assets of nearly $173 billion and $3.8 billion of adjusted operating cash flow.

During the quarter, we issued CHF 200 million or approximately $250 million of 6-year debt at a very attractive cost of 1%. We returned $1.5 billion of capital to shareholders, including $1.1 billion in share repurchases at an average price of $325.06 per share and $380 million in dividends. We ended the period with an all-time high in book value of nearly $74 billion or $189.93 per share

Book and tangible book value per share, excluding AOCI, grew 12.1% and 16.5% from last year. Our core operating return on tangible equity and core operating ROE in the quarter were 20.6% and 14%. Pretax catastrophe losses were $500 million for the quarter, principally from weather-related events split 87% U.S. and 13% international. Pretax prior period development in the quarter in our active companies was favorable $301 million, comprising $322 million of favorable development in short-tail lines and $21 million of unfavorable development in long tail-lines. Our corporate run-off portfolio had adverse development of $15 million. Our paid-to-incurred ratio for the quarter was 87%, and our net loss reserves increased to nearly $69 billion, representing growth of 5% from first quarter last year.

Turning to our investments. Our A-rated portfolio increased about $1.5 billion from strong operating cash flow and positive foreign exchange gains partially offset by $1.6 billion of net unrealized losses from an increase in interest rates and widening of credit spreads. Adjusted net investment income of $1.84 billion was at the top end of our previously guided range, primarily due to the increase in our invested asset base and stronger private equity returns.

We expect adjusted net investment income in the second quarter to be between $1.825 billion to $1.85 billion. Our core operating effective tax rate of 19.3% for the quarter was slightly below our previously guided range, primarily due to compensation-related equity awards, which vested in the first quarter. We continue to expect core operating effective tax rate for the full year to be in the range of 19.5% to 20%.

I'll now turn the call back over to Susan.

Thank you, Peter. At this point, we're happy to take your questions.

[Operator Instructions] Your first question comes from the line of Bob Huang of Morgan Stanley.

My first question is on the geopolitical commentaries you had in your opening remarks. Can you maybe help us unpack this concept a little bit? Just -- we're hearing inflationary concerns out of Asia, out of parts of Europe due to the conflict in Iran. Do you see that at some point in time affect pricing expectations in the U.S. market if the conflict kind of drags on longer than expected? Just curious your thoughts on that.

As I said, the degree, the pattern, the timing is unknowable. However, global supply chains, depends substantially. You mentioned Asia. U.S., we depend on supply chain through Asia. We depend on supply chain through Mexico and other parts of the world. The impact of the Gulf on supply chain availability of commodities and other inputs and the impact to shipping, of course, is going to have an inflationary impact.

How that passes through to inflation in the U.S., the degree of it and where it actually shows up is not really knowable at this time. But it isn't going to be 0. That's for sure. And how transient it is, is unknowable also. Longer it goes on, stickier it will be. That's sort of the mental model I have. How it will pass through on insurance, I don't know. I'm not -- it's not something that I'm really ringing my hands about. I'm concerned about. It will likely be short-term transient. We'll see what it is when it shows up, and we will respond to it accordingly.

Got it. Really appreciate the thoughts. My second question is on the small market E&S business and AI. So when we think about Trump's small market E&S business, that has grown fairly well over the past. And as we think about you deploying more AI capabilities either maybe through distribution or just internal capabilities on underwriting. Can you maybe help us to think about the growth trajectory over the next 5 years. Is it fair to say the E&S market for you, specifically the smaller end of that can grow multiple times bigger in 5 years' time? Is that the right way to think about it?

I think about it a little differently. I think about the small commercial market, retail and E&S I actually think the greater opportunity for growth is in the vast retail end of it versus the E&S. But it's both. And what we have done to transform that business and what we're continuing to do to transform it including with the use of AI and now with what's in front of us with agentics within AI, an evolving large language model capabilities and enterprise software that emerges from that as well.

Yes, it is a real growth area for our company over the next 5 years. And by the way, not simply North America, we expect significant growth in various markets internationally that may ultimately -- really.

Your next question comes from the line of Mike Zaremski of BMO Capital Markets.

Question regarding some of your commentary around the pricing cycle, specifically in the larger account marketplaces where you called out pricing power is declining, I think, more than you feel makes sense to Chubb.

You also called out kind of the London specialty market is getting more competitive. Curious, you've been through lots of -- you and your team have been through lots of cycles. What's causing the competition this time? Is it just simply what you've seen before and folks are getting excited about increasing their top line growth in a softening marketplace? Or is there some other causes this time that you want to call out?

Yes. And let's step back and put a perspective on it too the market rates, so I gave you, Chubb, I gave you what we lost business for. If I sort of step back and look at overall market rate in Shared and Laird in North America and in London, Pricing overall is off 25% in the quarter, heading to 30%. It's -- you can actually see it's accelerating in that trend.

It's -- and by the way, lost cost to put a point on it, loss cost, they're moving at about 4% to 5% in shared and layered property. So you can work out the math there. It's always supply demand. So it's -- the amount of supply, which is capital that is chasing a relatively finite amount of business. And by the way, in a concentrated way, if it's E&S and it's London or it's in the United States, it's boxed up and brought to underwriters. You can access it. It's not like retail business generally.

You can -- and it's urban-based. It doesn't take a lot of capability. It takes some balance sheet capital and a couple of underwriters. And you're in the market. So it's a hunger that way, the difference -- and I wrote about it in the shareholder letter, so you can read that. I won't repeat at all. This destructural difference this time is simply how the capital is showing up. And it's showing up a lot of it in a volume-based incentive system.

MGAs. The majority of them, it's just volume based. What do they bring? They bring a cheaper price and a higher commission. And it's the reinsurance market, and it's alternative capital. And the number of bites of the apple in the supply chain by taken by intermediation. That is what you are reflecting here. And by the way, the loser at the end of the day is the ultimate risk taker who puts up the capital. this is short-tail business. The report card comes home rather quickly, so stay tuned.

That's helpful. And my follow-up is just on Chubb's digital transformation. You gave us an update back in December, but you've been talking about digital transformation for many, many years, probably much longer than peers.

Just curious, is there -- has your views changed in recent months given advances in technology on the kind of the pace of the cadence of the digital transformation, front-end loaded, back-end loaded or just pro rata over time? And also just do you feel that your digital transformation goals since they're longer term could change fairly materially over time given the pace of change in technology?

I haven't changed my view of our goals in the last 3 months, and it is steady, and we are executing and we are on track. The technology is evolving at a rapid pace. And the most interesting in the last number of months that will, frankly, is still emerging. There's a lot of talk about it, but how it actually operationalize is the notion of what agentics now really brings?

And the notion of enterprise solutions that some of the developers of frontier large language models are working to actually monetize all that they've spent in development. And I think those trends as they emerge, we'll only accelerate, improve, lower cost, make it easier. So I'll stop right there. It's -- it's an exciting time. And you have to spend and I spend much more time on this subject than I did even 2 years ago or a year ago. You need to have knowledge. You can't just be listening to others. You got to have firsthand knowledge. And otherwise, you yourself start to become irrelevant. So as a leader, all that's on my mind.

Your next question comes from the line of Gregory Peters of Raymond James.

So I'm going to ask a follow-up question to the -- some of your comments you just made. And some of your shareholders have reached out to me. And specifically, there's so much news in the marketplace about the rapid evolution of technology, specifically the new piece of information we're all processing is the Anthropic’s Mythos.

And I'm just curious how you view this type of technology and its risks to like the cyber insurance market, how you think it might affect contingent business interruption. And then these tech companies are rolling out this technology. And if it causes problems, I'm sure they're going to face some liability costs. So just trying to come at it from a slightly different angle, but anyways, your views would be appreciated.

Sure, Greg. And that's not a slightly different angle. That's a different angle, and it's the right question. First, just on mythos and it's the notion of finding vulnerabilities and we've redefined vulnerabilities, the threshold for vulnerability has been lowered. What were minor vulnerabilities can now be aggregated in a much more insightful way.

Anthropic is a code generator. So it can read code. So it's -- it shouldn't be shocking that since it can read code, look at another use that has emerged. And then there are others, think Gemini's models. And the company's business model, they go and they do searches for information. That means they know systems, computers. They know how to access the system does.

So frankly, it can look at code. Finding vulnerabilities in your -- right now, it's not just -- and just on level setting. It's not just that you can use this to find your own vulnerabilities. But many companies, most companies also use open source in their estate and so third party. And to the degree it's open source that way in the estate, you can find vulnerabilities, maybe even before suppliers do. Doesn't mean the patch has been created. So in a word, the arms race is on.

Now it is about hygiene and services to monitor and to support clients and identifying and fixing. And clearly, how diligent are you? Do you identify and patch? And imagine now the tools to patch are more automated and that automation is improving quickly. So you can patch faster. You can identify, you can patch if you choose to, see how faster speed. So that's the defense side of it, while we know the offense side is just around the corner.

By the way, from what we can tell so far in AI in cyber attacks using AI. There really is only one instance we're aware of so far where it didn't involve a human. Other than that, humans are in the cockpit when they were using agentics so far. From an underwriter's point of view, obviously, policy conditions and pricing are on our minds. Large account will be much better at hygiene and have much stronger perimeters to get through to penetrate than small companies. Small companies, on the other hand, are less target individually, but create more systemic concern.

And then finally, the biggest meat ball there is middle market companies. They're a target. They got more money, and they're less capable at hygiene and focus on it less and defense. And so all of that is on our -- and they have weaker perimeters. All that is on our minds as underwriters. And I give you all this, so you have a sense that we're thoughtful about this.

That's good detail. For my follow-up question, I'm going to -- I'm just going to focus on -- if you look at the PC consolidated operations, you're generating in the first quarter an 84 combined ratio. You're on track to have a heck of a year. How do you think, broadly speaking, about the new business penalty, the fact that writing new business could be dilutive to that 84% combined ratio versus retention. So just walk us through your mental model on some of the points in that.

Well, we run in our various businesses, call it, 85% and north of retention. large account E&S, the property I talked about is where we're -- well, we shed half the volume. And by the way, that half the volume we shed, most of it was because we walked away. We also purchased additional reinsurance that impacted our premium growth and reduced our exposure. But we always have the new business penalty. So I don't see -- I'm thinking about what you're saying, and I don't really see much of an impact. I don't see any impact, frankly.

And when I'm maintaining underwriting discipline in property, if anything, what I'm doing is ameliorating impacts to combined ratio in our minds because we're only shedding business that is woefully inadequately priced if we were to write it.

Your next question comes from the line of Meyer Shields of KBW.

I guess one modeling question to start with. Obviously, you called out the savings-oriented single premiums in life insurance in terms of written premiums. And we saw a similar, I guess, uptick in policy benefits. Does that stay elevated in future quarters also if the sales of these products normalize or go back what it was before?

Do you want to take that offline? Do you want to answer?

Yes, I'll just do it real quick. So the savings-oriented products, as you know, are more spread-based than underwriting margin based, and that's how you have to think about it. And so if you will, if we're selling elevated amounts of premium, there'll be a policy benefit that would match it. But over time, the margin comes through the investment product.

I don't -- just to understand, it's Asia. And first quarter in Asia, classically an agency business, very fast start. I don't expect to see this kind of growth continue in single premium business. Return on capital for it is brilliant. I'm not in love with the margin of it. But I'll tell you what, it's like mutual fund business, you write a lot of it, and you make some money. But I expect more of growth in regular premium on risk-based product as we go forward in the year.

Okay. Fantastic. That's very helpful. And if I can sort of switch gears back to AI. One of the debates out there right now is whether -- if the insurance brokers collectively use AI to lower their own expenses or expand their margins. Does that provide an opportunity for companies like Chubb to reduce acquisition expenses?

Pick your moment and at the right moment, it does. I mean, ultimately, I have to tell you, and I have been in this business a long time. And this industry has certain idiosyncrasies about it. And there is a belief that, therefore, these things will be durable like the cost of intermediation.

The cost of intermediation in many parts of the industry, and this is not a slam against brokers. There are partners, but the intermediation costs overall in numerous parts of the business are excessive. And in an age of digitalization, in an age of AI and what technology does, one of the hallmarks of that is that it ought to ultimately, and it will, in so many areas, bring down cost. And if you look at the economics of the business and the cost of intermediation, I think in the longer term, it will -- it should decline.

Your next question comes from the line of Tracy Benguigui of Wolfe Research.

My question is for Tim Boroughs. There's been a noticeable change in tone by the market around private credit recently. From your perspective, how that influence how you're thinking about the role of private credit to play in your portfolio going forward? And if you could also touch on the health of the existing book, particularly any trends you may be seeing in underlying borrower performance or early signs of stress?

Yes. Sure. On our private credit, our credit -- our exposure to private credit is less than 4% of total investments and just over 50% of that total is in direct lending consisting of first lien senior secured loans that are at the top of the capital structure.

This portfolio is in separately managed accounts. And I think that, that's important, not BDCs, where we have control of deployment and enforce conservative guidelines to our managers. While the direct lending sector has grown rapidly, as you know, in the last few years, we've remained disciplined and have not grown our allocation. Our small group of experienced managers has consistently delivered strong conservative results with a loss experience we estimate to be only 1/3 of the broader direct lending universe.

This discipline is further evident in our very modest exposure to software, which at less than $150 million or 4% of the direct lending portfolio is a fraction of the 20% average across the sector and less than 0.25% of our total investment portfolio.

That's super helpful. I'm also love to get your thoughts on how you're thinking about the duration of this soft cycle. Does that steep pace of property pricing decline suggest something shorter-lived, maybe less sustainable? Or do the structural and capital factors you discussed with Mike point to a longer soft cycle? And if you could also touch on if you've seen any deterioration on terms and conditions that may play into the duration of this soft cycle.

Yes. Terms and conditions just on the margin, not 0, but on the margin. And as to duration, well, look, I don't know. What I do know is you underprice business in property, and I haven't noticed that the attritional loss environment. Property premium, property pricing is made up of two things: attritional loss. So you got price to support attritional loss in premium and then you got cat.

I haven't noticed a diminution in the attritional loss environment. That's pretty steady, and it has a little volatility to it because of the size of losses, but pretty darn steady. And on the cat side, well, unless you believe that the models are wrong or that somehow the climate environment is going to change or has changed and is going to become something other than what it has been, then -- then we have an adequate pricing and an adequate pricing in property tends to reveal itself pretty quickly.

And the only way out for capital providers at that point is to adjust pricing and to ensure they got the right terms and conditions. And so generally, in my mind, you go to a dumb place pretty quick, then the reaction the other way ought to be quicker. But you know what, I don't know with certainty. But that's kind of my mental model.

Your next question comes from the line of David Motemaden of Evercore.

I had another market question for North America Commercial. I noticed that the cash pricing has held in pretty well here and actually accelerated a little bit this quarter. I get that it's nuanced, but as property returns come under pressure, do you expect to see increased competitive behavior shifting into casualty. Are you seeing any early signs of that? Just sort of wondering your outlook there.

No. The -- so far, the pattern in pricing is about what I observed to you in prior quarters. In the cohorts that need price, you're getting price in excess of loss cost. And where the pricing is adequate, it is generally flat to or in some instances, below loss cost increases. But I see it at this point as I look through the stack as pretty rational, not everywhere, of course. It's a market. But overall, I do. And I even have been surprised in certain areas where the market response has been the correct response and it creates more opportunity where rate adequacy is required and the market is respective though.

Got it. That's encouraging there. Maybe just switching gears, the Chubb worksite benefits the 16% growth there, that's pretty solid, I think, especially after similar growth last year. Could you just talk a little bit about the strategic role of the worksite benefits business within the broader portfolio and how you're thinking about the key building blocks to scale it from here, whether that's distribution product expansion or maybe even potentially M&A?

Yes. There's no M&A in there on the horizon. As we see, we've built it organically, and we're continuing to -- it's fundamentally part of our Accident & Health strategy. We pursue it in two ways. We have the legacy agency force of combined that we have retooled to not sell individual insurance, but small group, worksite benefits business.

And it is predominantly supplemental A&H business that you know us for dread disease, hospital cash, et cetera, to really lower middle income to middle income people and provides a supplemental product to them. It's the same but with a different distribution for merger account, middle market, upper middle market to large jumbo now where we're awarded business. And it works very closely with our P&C distribution and our P&C distribution on the brokers who represent us that way. They have expanded greatly over the years into employee benefits.

And the notion that you couldn't cross sell one to the other is an old math. Because, in fact, the relationships on the accounts, we are benefiting from that in the growth of Chubb worksite benefits. And it, again, is a similar product mix, which may be a bit more of term life built into it as well. It's risk-based products.

When I look at -- and it's on Life paper. So when you look at the broader story, of our life business and you look at our international Life business, which, as I've told you, is over 2/3 risk-based supplemental A&H type business growing through agency distribution, digital distribution, banks, et cetera, and has as well savings and other protection products within it. It's just part of a coherent story of what we are pursuing between accident and health and life, which both are growth areas for the company.

Your next question comes from the line of Alex Scott of Barclays.

First one I have is on the Middle East conflict. Can you talk about your involvement in some of the solutions that are being contemplated for marine and trade credit and so forth? And to what degree that could support some growth near term?

And to what degree, what?

It could just help with, I guess, the growth opportunity.

I was approached by our government to put together the program that you have read about that we announced. The government wanted to support shipping through the Gulf and open when they think that the risk environment is such that they can support with military convoys ships that would transit the Gulf and that has yet to occur.

The program is to ensure shipping under those conditions and the purchase of our insurance program is a condition to being part of a convoy that the U.S. would run. The U.S. military would run. The program is supported by U.S. insurers taking 50% of the risk and the other half of the risk is taken by an arm of the federal government.

We have done it, number one to support our country and to support our military. Number two, to support the global commons and the economy, to the degree that we practicing our craft can provide that service. And it's in place and when conditions are such. If they are, then -- this will obviously generate would potentially generate premium revenue. And stay tuned.

That's all helpful. Second one I had is on your partnership with KKR and some of the funds that you're putting together. And I just wanted to check in on the timing of it, when some of those newer things you've been working on are going to potentially contribute to NII or if they're already contributing to NII. I just wasn't clear. And I guess related to that, has some of the AI disruption changed anything about timing of all of that and the work you're doing?

Yes. I think you're missing something. We have disclosed quite clearly, particularly the last at the investor dinner and in quarters before, quite a bit of detail about our alternative assets and the investment activity there, what's our strategy?

We -- half of it is in our partnership called Strategic Holdings. And we described what that is about. And by the way, we've been very clear about the income that it is producing and the income we expect it to produce over the next few years that we expect to achieve as we deploy. We've talked about the capital deployment. So that's all out there, but we're happy to separately take it offline and give you detail around it. I think Peter wanted to give you.

No, that's fine, Alex. I can talk to you offline, but it does show up in our adjusted NII, and you can see it on the income statement and income from private equity partnerships. That's a substantial part.

Your next question comes from the line of Matthew Heimermann of Citi.

Just one on reinsurance. I'm just curious, should we think about relative to any softening in pricing relative to how you're thinking about rate adequacy, just more opportunistic reinsurance purchases on a go-forward basis? Or is it just this was so acute, particularly on the property side, you felt compelled to do so?

Can you just repeat that, Matt? We have something changing. Can you hear me?

I can hear you, and I'm on a headset.

We just gave ourselves a head fake. But go ahead. Can you repeat?

Just how to think about how likely additional opportunistic reinsurance purchases are? And I don't want to react to what you did in property because the declines were pretty significant. But just how likely -- because I don't view as an arbitrage reinsurance buyer, but obviously it's available. So just trying to think about how your thinking around risk management evolves vis-a-vis the reinsurance pricing spread. And the follow-on really, which I'm really more curious about is like where does this allow you, if anywhere, to take more risk out outside, et cetera?

Yes. I'm not really going there, except to say to you that axiomatic in here, when pricing becomes marginal or inadequate, we have various tools to manage exposure and our appetite for exposure. It's not about premium. And so reinsurance is simply one of those. Could you hear that answer because we're having some audio problems right here..

You were clear to me. Willing to add anything with respect to if shrinking risk appetite in places in proper response to market conditions, does that create some flexibility to take more risk asset side? Or are there any things from a complex change in the portfolio that influence that?

No. No. The way we run a business doesn't think -- we don't think that. We've got plenty of capital, and we maximize the amount of risk we take based on how we judge risk reward, and there's no trade-off one to the other.

Your next question comes from the line of Brian Meredith of UBS.

Evan, we keep hearing a lot about price, what's happening in the property markets. I wonder if you could talk about terms and conditions. hearing a little bit more about some softening terms and conditions from people. Are you seeing that? And maybe you can maybe dive into that a little bit because that can be kind of scary.

Welcome to insurance, Brian. It's not scary. It just is what it always turns out to be. No, as I said earlier, we're seeing it only on the margin right now. Other than that, we're not, at this point, seeing changes to terms and conditions. And we're quite mindful and there you go. And by the way, when we look at pricing changes, we value term and condition changes. So we don't just sort of say price goes this. And by the way, change in BI waiting periods, deductibles, CPI, et cetera, that's just off to the side. No, we actually put value on it in pricing. -- we're seeing it very marginally at this point.

Great. And then the second question is I've heard a little bit from some other companies about admitted markets getting call it, more competitive in taking business back from the E&S or wholesale non-admitted markets. Are you seeing that at this point?

I am on the margin of it so far. And frankly, it's what's so interesting to me. I look at middle market and small commercial E&S versus admitted. Admitted, much, much more discipline. E&S less so. And that is, again, back to the comments I made about distribution capital and the incentive system for volume. It's, to some degree, terribly illogical to me. I'm seeing some go back towards the admitted. It wouldn't surprise me to see more. It's a classic pattern in softening market. Where I'm seeing it is more on the margin in the property side. retail that will all of a sudden get so excited to write habitational wood frame business in Texas. Okay. Good luck to you.

Thank you. We've run out of time for questions. This concludes today's Q&A session. I'll now pass the conference back over to Susan Spivak for closing remarks.

Thank you, everyone, for joining us today. If you have any follow-up questions, we will be around to take your call enjoy the day, and thanks again.

This concludes today's conference call. You may now disconnect.

Thank you for standing by. My name is [ Jay ], and I will be your conference operator today. At this time, I would like to welcome everyone to the Chubb Limited Fourth Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Susan Spivak, Senior Vice President, Investor Relations. You may begin.

Thank you, and welcome to our December 31, 2025 Fourth Quarter and Year-end 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.

See our recent SEC filings, earnings release and financial supplement, which are all 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 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. Then we'll take your questions. Also with us today to assist with your questions are several members of our management team. And now it's my pleasure to turn the call over to Evan.

Good morning. We had an outstanding quarter, which contributed to another record year, demonstrating both the resilience on the broadly diversified nature of our company. We delivered excellent full year results with strong contributions from virtually all of our businesses.

We achieved record earnings for both the quarter and the year. For the quarter, very strong double-digit increases in underwriting and life income along with record investment income, led to core operating income of nearly $3 billion or $7.52 per share up about 22% and 25%, respectively. Total company net premiums grew almost 9% with P&C up 7.7% and life up about 17%.

In fact, our company's published growth this quarter was faster than the average for the full year. In the quarter, our underwriting performance was simply outstanding. P&C underwriting income was $2.2 billion, up 40% with a record low combined ratio of 81.2%.

Our published underwriting results were supported, of course, by low cats and prior period reserve development, but importantly, very strong current accident year performance from our businesses across the board, including from our agriculture division, where we are the #1 crop insurer in America.

Agriculture's outstanding results benefited the quarter's underlying current accident year combined ratio of 80.4% which was nearly 2 points better than prior year and a record low. Importantly, however, excluding agriculture, the global P&C current accident year combined ratio, reflecting the strength of our businesses from around the globe was 80.9% almost a full point better than prior year and again, a record result.

And we had an outstanding quarter on the investment side of our business. We generated record adjustment net investment income of $1.8 billion, up 7.3%. Our fixed income portfolio yield is 5.1% and our current new money rate averages slightly above that. Our invested asset now stands at $169 billion, up from $151 billion a year ago.

The more important time frame to me to discuss though is the full year, and what a year we had. We printed record operating income just shy of $10 billion or $24.79 per share, up about 9% and 11%, respectively, over prior. For perspective, over the past 3 and 5 years, core operating income has grown 55% and over 200%.

All 3 major sources of income for our company produced record results last year. P&C underwriting income of $6.5 billion was up 11.6% with a record low combined ratio for the year of 85.7%. Adjusted net investment income rose 9% to almost $7 billion, and life insurance income of $1.2 billion was up over 13%.

Our record underwriting results and earnings were achieved in spite of full year cat losses that were, in fact, higher than prior year, substantially driven by the California wildfires in the first quarter. Though U.S. and worldwide hurricane and typhoon seasons were unusually light this year. Annual industry cat losses still approached $129 billion.

By its nature, cat exposure is volatile. Frequency and severity of losses are alive and well. Fire, flood, cyclonic and earthquake are all perils that contributed to industry cat losses. For the year, we grew total company premiums over 6.5%, with P&C up about 5.5% and life up over 15%. Per share tangible book value, our most important measure of wealth creation grew 25.7% last year.

Peter is going to have more to say about financial items. Again, our results for both the quarter and the year, top and bottom line, put a point on the broad-based, diversified nature of the company, by geography, by product, by commercial and consumer customer segment and distribution channel, it speaks to how well we are positioned both relatively and in absolute terms.

Turning to growth pricing in the rate environment. P&C premium revenue again grew over 7.5% in the quarter, with consumer up almost 12% and commercial up over 6%. Our international P&C and U.S. agriculture business had a particularly strong growth quarter, with premiums up nearly 11% and over 45%, respectively. But we also had strong growth from our U.S. personal lines business and our commercial U.S. middle market and E&S businesses.

In terms of the commercial P&C underwriting environment in the fourth quarter, as I said in the last few quarters, the market globally is in transition and growing incrementally more competitive quarter-by-quarter, particularly large account property admitted in E&S and upper middle market.

Casualty pricing, overall, large account, E&S and middle market continues to firm in the areas that require rate. And in those that don't, price increases have slowed. Financial lines remained soft with some signs of firming in discrete classes. Let me give you some more color on the fourth quarter by division, and I'm going to begin with our international P&C business.

Premiums in overseas general were up 10.8% or over 8% in constant dollar, a very good result. Premiums in our global retail, which operates in 53 countries and which is 90% of our overseas general division were up 12.5%. With consumer premiums, both A&H and personal lines up 18.7%. And commercial lines, up almost 7.5%. Latin America grew 14.7% with consumer up almost 18% and commercial up 10.5%.

Asia grew 13%, with consumer up 25% and commercial flat and Europe grew over 7%. In our international retail commercial business, P&C rates were down 3.6% and financial lines rates were down almost 9%. Loss costs remained steady. Premiums in our London wholesale business, which is 10% of our international P&C were down about 1%.

Given more competitive London open market conditions basically across the board, property, marine, aviation and professional lines. Turning to North America. Total P&C premiums were up over 6.5%. Agriculture, again, was up over 45%, predominantly due to the profit sharing formula with the government.

Excluding agriculture, premiums were up 4.7% including more than 6% in personal lines and 4.3% in commercial, which is made up of middle market, small E&S and large account divisions. Breaking U.S. commercial growth down further, premiums in middle market and small commercial grew over 6%, with P&C up 7.5% and financial lines up 1.5%. New business for middle market and small was strong, up more than 17% versus prior year. Premiums in major accounts and specialty grew 3%. With major or large account business, up 0.5% in Westchester, our E&S company, up over 7.5%. Major account and for that matter, Westchester growth, was impacted by property, obviously. And in major, we wrote fewer one-off LPT transactions than we did prior year.

Commercial pricing for property and casualty, excluding fin lines and comp was up 4.3%, with rates up 2.5% and exposure change of 1.8%. Property pricing was down 1.5% with rates down 4.6%, partially offset by exposure of 3.3%. Going a step further, property pricing was down over 13.5% in large account business and E&S and it was up 3.7% in middle market and small commercial.

Casualty pricing in North America was up 8.5%, with rates up 7.6% and exposure up 0.8%. Financial lines pricing was down 1.5%, and comp middle market pricing was down just under 1%. Large account risk management pricing was up 6.5%. In North America commercial, again, there was no change to our selected loss cost trends. Premiums in North America, high net worth personal lines grew over 6%, and homeowners pricing was up over 8.5%.

In our international life insurance business, which is fundamentally Asia, premiums were up almost 18% in constant dollar. And in North America, premiums in Chubb worksite benefits business were up over 16.5%. Our Life division produced $322 million of pretax income in the quarter, up just shy of 20%.

So in summary, we had a great quarter and a great year, which again speaks to the broadly diversified and global nature of our company. We have many sources of opportunity on both the liability and asset side of the balance sheet. At the same time, we are continuing to invest to improve our competitive profile. While early, we're off to a good start in '26, and we're confident in our ability to generate for the year strong growth in operating earnings and double-digit growth in EPS and tangible book value through the 3 sources of income, P&C underwriting, investment income and life though cats and FX aside. I'll turn the call over to Peter, and then we're going to come back and take your questions.

Good morning. As you heard from Evan, we concluded the year with an outstanding quarter that produce full year earnings records and all-time highs on our balance sheet, including cash and invested assets exceeding $171 billion and book value of nearly $74 billion. Our exceptional results were supported by $4.2 billion of adjusted operating cash flows in the quarter and $13.9 billion for the year.

We returned $1.5 billion of capital to shareholders which contributed to a total of $4.9 billion for the year or about half of our core operating income, including $3.4 billion in share repurchases at an average price of $282.57 per share and $1.5 billion in dividends.

Book and tangible book value per share, excluding AOCI, grew 3.4% and 4.8%, respectively, for the quarter and 11% and 15.5%, respectively, for the year. Our core operating return on tangible equity and core operating ROE in the quarter were 23.5% and 15.9%.

Pretax catastrophe losses were $365 million for the quarter, principally from weather-related events split 55% U.S. and 45% international and $2.9 billion for the year versus $2.4 billion in the prior year. Pretax prior period development in the quarter in our active companies was favorable $430 million, split 64% short tail lines and 36% long tail lines. Our corporate runoff portfolio had adverse development of $162 million primarily related to our asbestos review, which is completed each fourth quarter. Our paid-to-incurred ratio for the quarter and year was 105% and 91%, respectively Excluding cats, PPD and agriculture, our paid-to-incurred ratio for the quarter and year was 94% and 88%. Turning to investments. Our A-rated portfolio increased about $2.7 billion from the prior quarter and $18.1 billion from the prior year.

The increase for the quarter and full year reflects strong operating cash flow and positive marks to market while the year also includes favorable FX, partially offset by shareholder distributions.

Adjusted net investment income of $1.81 billion was at the top end of our previously guided range, primarily due to strong growth in the invested asset base. For the year, adjusted net investment income grew 9% to $6.9 billion, which included approximately $6 billion or 9% growth from our public fixed income portfolio and $940 million or 8.5% growth from our private investments.

We expect adjusted net investment income in the first quarter of 2026 to be between $1.81 billion to $1.84 billion. Our core operating effective tax rate was 18.7% for the quarter and 19.4% for the year, which was slightly below our previously guided range.

We expect our annual core operating effective tax rate for 2026 to be in the range of 19.5% to 20%. I'll now turn the call back over to Susan.

Thank you, Peter. At this point, we're happy to take your questions. Operator, please queue up the questions.

[Operator Instructions] Your first question comes from the line of Brian Meredith of UBS.

Evan, first question, just looking at the U.S. commercial lines, North American commercial lines business. Your underlying margins have been incredibly consistent and excellent results over the last several years. I'm just wondering, given the current pricing environment, do you think you can sustain those here in 2026?

Brian. I don't give forward guidance, as you know. And on one hand, you have clearly, lines of business where price is not keeping pace with loss cost. And the math naturally works in one direction. On the other hand, we have a very broad business and mix of business changes, mitigate on the other side.

I'm very comfortable with the combined ratios we are publishing, and I do not prognosticate the future, but I do have confidence and underwriting income for this company, growth in underwriting income contributing to that growth in EPS.

And then maybe -- that's terrific. And then maybe pivot over to the personal lines business. Once again, terrific combined ratios, there's been some press and some regulators talking about excess profit laws and implementing them. I'm just curious your thoughts on that and potential implications for Chubb and this profitability in that business?

Yes. Look, if you measure our personal lines business in the United States over any reasonable period of time, 3, 5, 10 years, it classically runs in the high 80s to up into the low 90s combined ratios, given -- and it bounces around given the nature of catastrophe losses, in particular.

I'm very mindful and more than mindful sympathetic about the issue of affordability in the United States and -- but I would be careful when politicians think about that issue of affordability pointing to insurance as a culprit. We intermediate money. We don't print money. For job loss costs in homeowners are rising around 7.5% to 8% at the moment. Liability on one hand is a strong contributor to that. And we know liability costs in the U.S. overall rising inflation for the liability is roughly 9% -- 7% to 9% and that's multiples of CPI.

That's a problem with litigation. That's not an insurance company problem. Secondly, and I think more important to homeowners, a large part of pricing is catastrophes. And those are measured over an extended period.

As you know, you could have a 2-year period where you have huge outsized cats, and you lose money in that state. On the other hand, you could have a quiet period. And it looks like you made money. You measure it over an extended period.

And for homeowners, admitted homeowners in particular, prices are filed and they get approved based upon technical actuarial. So I would be careful of politicizing the affordability question as you point to homeowners insurance or it's going to create ultimately an availability problem and that will exacerbate affordability.

Your next question comes from the line of Bob Huang of Morgan Stanley.

I'm a sucker for overseas business so I'd like to ask a question on that. Clearly, the growth in Latin America and in Asia are very strong. And In Latin America, Mexico has been consistently called out as very much a favorable environment. Maybe can you give us a little bit of color outside of Mexico in Latin America in terms of -- what is the opportunity there? And what is the growth momentum there?

Yes. It's more in our consumer than in our commercial businesses. We have -- as I'm sure you know, Banco de Chile, largest bank in Chile is our long-term partner for distribution of consumer-based insurances as an example. Nubank is our partner in Brazil for digitally distributed insurance, consumer insurance. In Ecuador, we are partners with Banco Guayaquil, one of the biggest banks in Ecuador for distribution of the consumer insurances, you get the picture. And in Argentina, we have actually a very good business growing in both consumer and commercial. While commercial is good in Mexico and Brazil, to a degree in Chile and Colombia, it's the consumer businesses with multiple distributions, A&H specialty personal lines and automobile on both a direct-to-consumer through bank and other distribution digitally based direct-to-consumer and broker and agent driven our Mexico business predominantly is agent-driven growth.

Though we are the exclusive insurance partner long term of Banamex and with the sale of Banamex right now from -- by Citigroup to a local Mexican management, I expect that's going to be another growth opportunity. So it's very broad-based. It's across a variety of countries, and we've been at it for years.

Really appreciate that. It sounds like a lot of opportunities without us worrying about pricing. Maybe the second point, staying on overseas, Asia business, clearly, another area of excitement but can you maybe give us a little bit of the competitive dynamics there, right? You made an acquisition there this year. Just curious about how we should think about an area where everyone is excited about it. And clearly, everyone wants a piece of that pie, so to speak.

Yes. First, I want to just -- so we stay grounded in reality. When you think about Asia, when you think about Latin America, Asia dwarfs Latin America in its size and scale and the opportunity. Both regions though are developing market and mature market regions. And they have that signature about them.

So a certain volatility to economic and political growth. It's many, many countries in Asia, small micro markets and large markets. But there is a certain volatility in any period, one period to another that can occur. The trend line for both regions is up and Asia in particular. Growth this quarter in Asia, as you saw, came fundamentally from consumer lines, commercial lines was flat.

That's mostly the large account business, Australia, Singapore base, Hong Kong a little bit where the environment more competitive. Our growth is in small and middle market commercial and in consumer lines, both agency and digitally and direct-to-consumer-oriented. Market by market, it is very hard to compete in that business for anybody to just come in and want a piece of that pie. It's a lot of countries every culture is different. They're economically different. They're small markets, many of them like Southeast Asia, but they add up in aggregate to be a big region, it's hard work, and you have to establish yourself, not with 1 office and 2 or 3 underwriters, you've got to have broad capability distributed through the country to be able to mine the opportunity of small and mid-market commercial and consumer.

So it's years of hard yards to build local franchises in those operations. And then on top of it, the ability to bring your technology and bring your data and your insights to bear from what you have and the scale around the globe to help your competitive profile in those markets, that is another dimension. And that's what we're hard at work at and it shows results and I'm bullish on the long-term opportunity. Any one period of time notwithstanding.

Your next question comes from the line of David Motemaden of Evercore ISI.

Evan, maybe just a follow-up on just on the overseas general insurance business and the consumer lines growth there has been robust, and it looks like that's continued over the last 3 quarters.

Sounds like you feel good about the opportunity and sustaining that. I guess -- could you help us think through how that manifests through margins? Because it feels like that's margin accretive, at least over the last few quarters. But I know there are some moving pieces there with the consumer business, higher expense ratio, lower loss ratios. I'm hoping you can help me think through that.

Yes. I can't help you too much that you're left to your own -- we each have our hell and you're left with that one. We don't break out the margin by business. We don't break out overseas general consumer versus commercial margins.

What I'm going to help you with is simply this. Our A&H -- it breaks down between A&H and auto and homeowners and specialty personal lines. Each has their own signature. And by the way, depending on the distribution channel, whether I'm doing it digitally or in a bank direct response, telemarketing, we're doing it through agency brokerage they have their own signature of acquisition costs and loss ratio.

They're reasonably steady businesses. Auto not as steady, obviously, as A&H is. Our A&H is a large business that is -- that a lot of the risk is on the direct marketing side, and we have built capability over many years. We're the #1 -- when we say we're the #1 direct marketer in Asia, that's predominantly A&H business over non-life and life. It produces a reasonably steady and decent underwriting margin. Beyond that, I'm confident in our mix of business overall between large accounts, middle and small and our consumer businesses internationally that our margins are, how do I want to say it, they are -- they are not predictable because it's the risk business but they are decent, as you see, and we feel confident in them.

Got it. I appreciate that. And then maybe just...

I know you wanted more, but we just don't break it down that way.

I had to try. But I guess just maybe a bigger picture question. The December presentation showed about 150 basis points of combined ratio improvement from the digital transformation over the next 3 to 4 years? And I'm not asking for formal guidance here. But could you just share how you're thinking about the key drivers and execution priorities to deliver on that improvement even as the competition in some of the markets you operate in intensifies?

Yes. Most of it is on the expense side. It is in both OpEx and in cost of claims. It is -- there is some that is but it is more -- much more minority that is projected in loss ratio, but we're fact-based people. And so as we see no more that we can measure mathematically, we gain more confidence in that portion in the insight.

And it is business by business, division by division. It's predominantly North America, U.K., Europe, and our larger markets of Asia and in Latin America. It is covering right now we're focused, in particular, on 9 or 10 very discrete projects that all the businesses are lined up on the business leaders, our technical team, around technology, data, AI, analytics and our operations.

And we work it with those who are fully dedicated along with the disciplines and the business leaders to transformation and bringing it all together in how we transform a business in the 9 discrete projects across a variety of geographies. Here you go, and it will continue to evolve.

Your next question comes from the line of Greg Peters of Raymond James.

Good morning. So I'm going to have 2 follow-up questions. One to the overseas operations. I guess I'm going to ask a question around foreign exchange and I realize this is probably going to spill over into geopolitical considerations as it relates to the growth of your operations.

But I'm looking -- I've been watching the last several weeks, the yen go down relative to the U.S. dollar. And I understand you're matching your assets and liabilities in the same currency. But running a global enterprise, I'm just curious how you look at foreign exchange volatility as it relates to what you're managing the enterprise risk?

Yes. We do not hedge revenue or income. The only time we really hedge is remittances -- around remittances when they're large. Our assets and liabilities are matched in currency so they move together. Foreign exchange, if the U.S. dollar weakens relatively, that's a tailwind to us in terms of growth, and it obviously helps income in any business generating income. And then if the dollar strengthens, which has been its longer-term trend over a long period, we pay that price.

And you can see it because we're transparent about it of what are we in constant dollar in terms of growth versus published. And so Greg, that is what it is. Right now, the prognostication is more towards the dollar at the moment, the dollar weakening as you look forward. But you know what, that sentiment bounces around and changes based upon financial conditions, economic and as you said, geopolitical.

Okay. And then I wanted to follow up on...

And by the way, that's why that is why I say that when we talk about any projection about Chubb future income or EPS growth, I do say cats and FX aside. We're in the risk business. It's not like we can control anything, but we have better control over most things and can forecast -- I can't forecast cats. I can't forecast FX, and I don't have control over them. And it doesn't speak to the intrinsic strength of the business.

Got it. I think you said in your -- the quote was macro conditions notwithstanding, when you talked about your outlook for growth.

I said it broadly.

Correct. Can I go back to the other comments around Agentic AI and digital infrastructure. And I guess I want to come at it from a different angle. The large brokers are talking about the build-out of this infrastructure as being a big opportunity. I think Marsh used 2,000 to 3,000 data centers being built over the next couple of years.

And so I guess I wanted to approach it from a couple of different angles. How do you see that evolving and Chubb's participation in that? And I guess there's also an investment opportunity, too, that Chubb might be looking at. So I'm just looking for how you're looking at the different touch points of this emerging trend and how it's going to impact your organization?

Yes. On the insurance side, we're all over it. We've been writing data centers, and we -- globally, this is a global opportunity. And we're -- our capabilities are extremely broad. We're in a rare group when it comes to capability. Builder's risk, operations in terms of property. And we write the primary property. We do the engineering.

We have large capacity we put at it. And others take shares behind us generally. We can do that on a global basis. Marine and all of the related exposures around that, surety, liability, professional lines when it comes to design of data centers.

We are one of the few that writes insurance around the broad variety of exposures globally that those who are constructing data centers confront. We have recently, obviously, with all of the investment that is going into this and by the way, on the utility and energy side, we are a major writer and no one is building a major data center without the energy and utility dimension of this, and we can seamlessly transition to that in coverage as well.

With all the investment that is going in our -- inside our organization, we have doubled down on how we are structured to bring all of the coverages, the services and engineering, the teams together to approach this globally were an important factor when Aon and Marsh and other major brokers are engaged in the creation and putting together in placement of data centers.

The one thing I would say about this right now, there's a lot of projects announced, how much of this actually gets built and over what period of time remains a question.

There are headwinds. There's headwinds around availability and affordability of energy to power data centers. And that is a rising and growing problem. How fast does that get addressed? And for each data center, it's a different answer depending on where they're located.

There's more pushback on where data centers will be built. There is the question of labor. And is labor available for the construction of data center, supply and the supply chains and the cost of supply are questions that hang out there. So there's a lot announced. We're all focused on it.

But I'd be careful not to be overly breathless about this. On the question on the invested asset side, some of -- this is a great technology that we are creating for economic and mankind purposes in so many great ways. There is trillions of dollars being poured in. I have no doubt that some of it is going to produce good returns. Some is going to produce more anemic returns and some may not prove to be money good both on the technology development side and on the infrastructure to support the technology, i.e., data centers, et cetera. As an investor, we are thoughtful and very cautious around this. I think there'll be a second act down the road that may be a very interesting investment opportunity, and I'll leave it at that.

Your next question comes from the line of Ryan Tunis of Cantor Fitzgerald.

So Evan, I guess just a follow-up on that question from Greg. GDP growth has been -- I'm just trying to think about how economic growth maps to growth if you're looking for insurance growth opportunities.

And obviously, a lot of the GDP growth we've seen has sort of come from this AI infrastructure build-out. As someone looking for growth opportunities in P&C, are you agnostic as to where the growth comes from? Or is -- would you actually prefer the GDP growth to be coming from more traditional means such as growth in employment.

Ryan, when GDP growth, if it's overly concentrated, it is more vulnerable. It is more -- it is potentially more volatile. Broader-based growth by definition, is more stable. And it creates more broad-based prosperity. That impacts both commercial and consumer.

So just as a businessman, as a citizen, I would say that to you. When it comes to Chubb growing, if we can earn an adequate risk-adjusted return on the growth, I'll take it wherever it's coming from. That's why we're -- we're pursuing opportunities in multiple directions.

Got you. And then just a follow-up, not looking for guidance, but the acquisition and expense ratio in North America commercial. It's kind of an upticking, I think, because of mix in middle market. Is that a trend that we should continue to see? Or do you feel like these levels are sort of steady state?

Be careful with it. In the quarter, a part of it is because -- and an important part is because we wrote less one-off transactions this year in the fourth quarter, LPT business, which type business loss portfolio transfer, which has a very low acquisition ratio to it.

Classically a little higher loss ratio. And that impacts it, and that bounces around quarter-to-quarter. You also have in North America commercial. Yes, middle and small growing faster than major. So that mix shift impacts it on one hand, but the relative size of each varies a little bit quarter-to-quarter. So you got a -- it's not just a straight line that way. But that trend in that direction, yes, is clear. And then E&S has been growing faster than major. And that is, by its nature, it's wholesale business as a higher acquisition ratio.

Your next question comes from the line of Matthew Heimermann of Citi Research.

First question would be, you had this comment with respect to more favorable January 1 conditions relative to expectations. I just -- I was curious what you meant by that, whether that was from a growth standpoint, from a pricing standpoint, geopolitical factors, just like to better understand what you meant.

Yes. It wasn't geopolitical. January 1, and don't overread it. January 1 is an important date for certain businesses, particularly large account business. It's a very important date in Europe and the U.K. very large percentage of the business, particularly it's large account oriented is on the continent and in the U.K. January 1.

And so between the U.S. and Europe and the U.K. in particular, the large account business, it did better than we, it had a relatively good start because it did better than we had imagined ourselves. That's all. So it said it was a statement of confidence for that business that we're off to a good start.

I appreciate it. I guess, with respect to -- one, I appreciate that you actually gave some targets on the investments you're making on the digital side. So thank you for that. I would be curious, though, when you think about the pace at which you're moving on that, how constrained are you at all, if at all, by other stakeholders' constituents, whether they be distributors, customers or service or technology providers?

Yes. And by the way, when we did this just that I want everyone understand, when I came out in December at the investor dinner to talk about this and to put this up, it's because I'm talking more long term and about intrinsic value creation and competitive profile of the company.

This is not going to become something that -- and it's a long term, and I put it out there on multiple years. So it's not something that is going to start working its way into worksheets or I'm going to start giving quarterly updates of this or this or this. It's missing the whole point. And from time to time, I will give updates that provide a broader insight when someone is thinking about investing in job who is long-term investing.

And to answer your question, the only place where a distribution partner constrains our ability to implement or to grow is really in our digital business with digital partners, where how fast given all of their priorities for growing their basic business.

Will they pay attention in connectivity, data, analytics, et cetera, and make available for us to be able to do what we do well and that is interest and distribute through their pipeline to customers. It's the only place of significance that comes to mind.

Your next question comes from the line of Tracy Benguigui of Wolfe Research.

On asset allocation, you're targeting to raise private from 12% of your investments to 15% over the medium term. I recognize that Schedule BA type of assets, at least for the private equity piece, consumes a lot of risk-based capital. Are you expecting to make that up with diversification credit like as you grow your life business, should I think about those 2 pieces moving together?

No. Go ahead, Peter. That's a worksheet question. I think we ought to take off-line, but I'm going to let Peter...

Not specific to life. There is an allocation of PE that goes into life and in particular, the Asian markets. But it's relatively modest to the overall footprint and what we intend to grow.

They're not -- we did not look at them together in diversification. And by the way, we're very mindful both on a statutory and an S&P basis, how much capital each class of alternative draws and we have made statements about how it will be and is accretive to our ROE now and will be as we go forward.

Okay. I love seeing actual quantified metrics with respect to your AI digital agenda. So my question is actually more on the cultural side. I kind of think of insurance tends to be a tribal culture. What is the reception from your underwriting and claims folks with respect to reinventing how they do business like the transformation piece?

Yes. It's very interesting, Tracy. The comment tribal. I think of every business in any industry, every company that is a good company and is well run. A hallmark of it is its culture. And culture is norms of behavior that all hold in common that they consider important and that forms culture.

And when I look at Chubb part of our culture is an ability and a willingness to adapt, change to be earnest -- it's a meritocracy where you're rewarded for what you achieve. We're a highly disciplined organization. The things we intend to do are measurable.

It's an organization and behavior that is about accountability. And that we take individual accountability. It's not about some committee. And when I add all that together, and it's a respectful culture. We respect each other. It's not management respecting employees. We're all employees. We're all colleagues and so when we have plans, and they are understood and explained, and we work through them.

The vast majority in this organization work hard towards achieving it with an open mind, and we support each other. It is for many employees, the transformation and we didn't invent this. The digital transformation society is going through and how it's going to impact businesses in economic, Chubb has a great opportunity to be a leader and to be highly relevant, but all of us have to adapt. All of us have to learn skills. All of us have to be flexible. And the majority, I have so much confidence in my colleagues.

The vast majority around the globe will put themselves into this. And that is a large part of what gives me confidence.

Your next question comes from the line of Andrew Kligerman of TD Cowen.

Evan, your commentary around financial lines and workers' comp pricing trends didn't sound that compelling. So it was interesting to me that financial lines net written premium was up 5.4%, workers' comp was up 3.6%, an acceleration from the prior quarters. So I'm wondering what you might be seeing there? Do you think this trend can continue where Chubb is growing in those lines?

Well, first of all, it bounces around quarter-to-quarter. But I'm going to turn it over to John Keogh to answer that question.

Andrew, why don't we talk about the financial lines number. This one that I observed, I think you understand is, one, that's a global number. So we're offering financial lines in a number of markets around the globe, some of which are growing, some of which are shrinking.

Financial lines also includes everything from public D&O to D&O for private companies, not for profits. It includes all sorts of professional lines. for different trade groups and industries. It's employment practices, it's fiduciary coverages, it's fidelity coverages, it's cyber coverages.

So in that number, you're seeing, I think, speaks to the diversity of our business and financial lines and the areas there where we were purposely growing that business because we think we're getting paid adequately for that particular product in that particular market. And there are other places, unfortunately, where we're shrinking where a product in a particular market around the globe does not meeting our requirement. So that number is an aggregation of the diversity of those businesses. To your question in terms of trend, the one thing we did see in the fourth quarter in the financial lines is some green shoots in terms of some areas that do need rate. And I'd call out, particularly in North America, we saw for the first time in many quarters, a slight rate increase on our public D&O book. We saw in transaction liability, pricing terms and conditions, a lot more rational in the fourth quarter than we've seen in the last couple of years.

And then employment practices in the U.S., we're pushing rate across the board because it needs it in that book of business.

In workers' comp, it was predominantly in middle market and small commercial that had a very good quarter. I'm comfortable because we don't write -- we're not a broad-based writer of all industries, all classes and comp. We've been and our signature for many years is we're selective within the industries and the states within which we write. This quarter was, in particular, a strong quarter. I don't believe it's such a trend, it was a bit opportunistic, but it was very good.

Got it. And then just shifting over to another outstanding prior period development favorable $268 million. Curious about the casualty piece, commercial auto excess liability. How did that develop? And maybe a little color on accident years, if you could.

Yes. We're not going to -- we don't break down that way, as you know. And the prior period reserve development in long-tail lines came from the portfolios that we studied in the quarter. Every quarter, we study a different cohort of portfolios for annual deep dive review.

We look provisionally every quarter in all portfolios, but we, in particular, react to those and especially long tail business, where it's part of a quarterly review. And so long tail in the cohorts we reviewed this quarter, they produced a favorable outcome. That's as far as I'm going to go.

And that's all the time we have for our Q&A session. I will now turn the conference back over to Susan Spivak for closing remarks.

Thank you, everyone, for joining us today. If you have any follow-up questions, we will be around to take your call. Enjoy the day, and thank you again.

This concludes today's conference call. You may now disconnect.

Thank 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 Third Quarter 2025 Earnings Call. [Operator Instructions]

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

Thank you, and welcome to our September 30, 2025 Third 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.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 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, then we'll take your questions. Also with us to assist with your questions today are several members of our management team.

And now it's my pleasure to turn the call over to Evan.

Good morning. As you saw from the numbers, we had an excellent quarter. In fact, a record earnings quarter. Core operating income of $3 billion was up 29% leading to EPS of $7.49 per share, up 31% from a year ago, both supported by record underwriting and investment results as well as solid premium revenue growth.

The results put a point on the broad-based and diversified nature of our company, geographically, by customer segment and by product area. Most of our businesses and regions of the world contributed. Geographically, that means North America, Asia, Latin America and U.K., Europe, when I say customer segments that contributed strong growth this quarter, that means globally, both consumer, homeowners and auto, specialty personal lines life and international A&H.

When I say commercial P&C, particularly middle market and small commercial our E&S business, crop insurance and a broad range of large account casualty and financial lines and growth was generated by numerous distribution sources. Brokerage agency, phone-based direct marketing and digital. In short, a wide variety of diverse businesses and geographies that are contributing to growth globally.

Our balance of business and presence about half U.S. and half outside provides a wide range of opportunities which supports long-term profitable growth. Importantly, it also supports our ability to manage the commercial P&C cycle with discipline. Something we are well known for doing. We expect to continue generating superior margin and earnings growth and, in fact, an increase to our return on shareholder equity.

In the quarter, record underwriting income on both a published and current accident year ex-cat basis was supported, of course, by a quiet cap quarter. But more importantly, by current underwriting year margin improvement and strong prior period development. Published underwriting income of $2.3 billion was up 55% from a year ago, with a record combined ratio of 81.8%, about 6 percentage points better than a year earlier.

Though cat losses were light in the quarter, rest assured, catastrophe risk is alive, well and obviously, by definition volatile. Remember, the California wildfires first quarter and convective storm activity through much of the year. Cat volatility aside, our underlying underwriting results were simply excellent in the quarter.

Current accident year underwriting income, excluding cats, was a record $2.2 billion, up 10%, supported by a combined ratio of 82.5%. The nearly a full point improvement from prior year, with most all of it coming from loss ratio improvement. On the invested asset side, for the quarter, adjusted net investment income was a record $1.8 billion, up 8.3%.

Our fixed income portfolio yield is 5.1% and our current new money rate is averaging 5.2%. Our operating cash flow in the quarter was quite strong at $4.5 billion, which is contributing to strong growth in our invested assets, which is up nearly 10% over the last 12 months.

Current fiscal financial and economic conditions favor attractive fixed income and alternative asset portfolio returns for our growing invested asset, federal budget deficits, inflation and rotation from the dollar support what we believe will be a steeper yield curve as we look to the future, which in turn should support our reinvestment rates and future investment income growth.

Tangible book value growth, our primary measure of wealth creation with 17% per share from a year ago and 6.6% from the previous quarter. Our annualized core operating return on tangible equity in the quarter was 24.5%, simply an outstanding result. Peter is going to have more to say about financial items in a couple of minutes.

Turning to growth, pricing and the rate environment. Total company premiums grew 7.5%, with consumer of almost 16% and commercial up 3.3%. The Commercial P&C growth this quarter was impacted by 2 items that benefited North America last year. Our underlying renewable commercial P&C business grew about 5.5%, which is more representative of our run rate.

Premiums in our life insurance division grew over 24.5%. In terms of the commercial P&C underwriting environment, I would characterize the market globally is in transition. Competition continues to grow. Especially large account-related short tail business, both admitted and E&S.

A lot more capital is chasing the property business and prices are softening while terms and conditions remain steady. On the other hand, middle market and small commercial property is more disciplined and orderly though greater competition is beginning to show as expected, particularly in upper middle market.

In mid-market, property rates continue to rise, but naturally at a slower pace. Casualty pricing overall large account, E&S and middle market is also slowing, though it continues to firm in the areas that require rate. It's quite rational. Financial lines remain soft but we're seeing signs of firming in discrete classes. I'll give you some more color by division. For a change, let's begin this quarter with our international business.

Premiums in our Overseas General division were up 9.7% or nearly 7.5% in constant dollars. Consumer was up 15.5% and commercial lines grew nearly 6%. From a region of the world perspective, Asia grew over 14%. Europe grew almost 5%, and Latin America grew over 10.5%. Consumer lines grew more than 25% in Asia and more than 12.5% in Latin America.

Premiums in our London wholesale business were over 8.5%. Our international retail and E&S business, again, illustrates the power of Chubb diversification. In our international retail commercial business P&C rates were down 1.3%, and financial lines rates were down over 8%. Turning to North America. Total P&C premiums were up 4.4% and including over 8% in Personal Lines and 3.5% growth in commercial.

Adjusting for the 2 nonrecurring items, we wrote last year that did not repeat this year, renewable premiums in our North America commercial business grew 6.2%, with P&C lines up 5.8% and financial lines up almost 8.5%. Drilling down our North America high net worth personal lines business generated more than $1.8 billion in net written premium for the quarter.

This business is now almost as large as our North American middle market and major accounts commercial businesses. each with premiums in the quarter of $2.1 billion, again, illustrating our company's diversification. Premium growth for our true high net worth segments was about 11.5%. On the commercial P&C side in North America, premiums in our middle market business, we're the second largest writer in the U.S., grew 4.1% to $2.1 billion.

Middle market workers' comp growth was impacted by one of the 24-year items I mentioned, namely an annual retrospective premium exposure adjustment. We make it -- which we make every year in the third quarter. That benefited us much less this year than last. Adjusting for that, we grew middle market almost 7% with P&C lines up 8.6% and financial lines flat.

Premiums in major accounts and specialty grew 2.5%, and with major up 3.2% and E&S, up 6.6%. The major accounts division was up 5.6%, adjusting for the impact of a large one-off LPT written last year. In North America Commercial, we had a very good quarter for new business. was up 24% versus prior year, with double-digit growth in major specialty, middle market and small commercial.

Our renewal retention rate on a policy count basis was over 86%. Commercial pricing for property and casualty, excluding financial lines and comp was up 4.3% with rates up 2.4%, an exposure change of 1.9%. Property pricing was flat with rates down 3.3%, an exposure change of $3.5 million. And going a step further, property pricing was down 13.5% in large account business in E&S and up 6.2% in middle market and small commercial.

Casualty pricing in North America was up 8% with rates up 7.5% and exposure up 0.5%. Financial lines pricing was down almost 2%, and the workers' comp primary comp pricing was flat, while large account risk management pricing was up almost 5%. In North America, commercial there was no change to our selected loss cost trends.

In our international life insurance business, which is fundamentally Asia, premiums were up 26.5% we had a large onetime premium in New Zealand, and adjusting for that, growth was up just over 16.5 million in North America, combined insurance company premiums were up 18%. Our Life division produced $324 million of pretax income in the quarter, up over 14%.

Chubb's fundamentals and our positioning are excellent. We're performing at a high level, almost anywhere you look in the company. We have broad global diversification and a disciplined energized and talented team of professionals whom I couldn't be more proud of to call my colleagues. We are reaping results and planting seeds for the future.

Our digital and AI efforts, years in the making are contributing to growth and beginning to transform the company in how we do business. Our balance sheet, starting with loss reserves has never been stronger. We estimate that 70% to 80% of our businesses present attractive growth opportunities. And looking forward from all we can see our performance is enduring.

We will maintain superior earnings growth, including double-digit growth in EPS, book intangible book value and core operating ROE increasing to 14-plus percent over the medium term. In the quarter, we stepped up share buybacks and because we are an excellent investment with our stock trading well below intrinsic value.

Increased buyback activity will continue while at the same time, we will continue to build additional capital and our invested assets. I'm going to turn the call over to Peter now, and then we're going to come back and take questions.

Good morning. As you have just heard, we had another strong quarter that produced 9-month records in our 3 primary sources of earnings. Our results were supported by $4.5 billion of adjusted operating cash flows and exceptional balance sheet strength, including all-time highs in both book value of nearly $72 billion and cash and invested assets that exceeded $168 billion.

There are a few capital related matters I'd like to touch on. First, we returned $1.6 billion of capital to shareholders during the quarter. including $385 million in dividends and $1.2 billion in share repurchases. And Secondly, we issued approximately $2.2 billion of debt at a weighted average cost of 4% and an average term of about 12 years.

Book and tangible book value per share, excluding AOCI, grew 2.8% and 3.8%, respectively, for the quarter and 10.4% and 14.8% from the prior year. Our core operating return on tangible equity and core operating ROE were 24.5% and 16.3%, respectively, for the quarter. Pretax catastrophe losses were $285 million for the quarter, principally from weather-related events split 86% U.S. and 14% international, and $2.6 billion through 9 months versus $1.8 billion over the same period last year.

Pretax prior period development in the quarter in our active companies was favorable $422 million, comprising $460 million of favorable development in short tail lines and $38 million of unfavorable development in long tail lines. Our corporate runoff portfolio had adverse development of $61 million, mostly environmental related. Our paid-to-incurred ratio for the quarter was 83% and 87% year-to-date.

Turning to investments. Our A-rated portfolio, which had an average book yield of 5.1% for the quarter increased over $7.5 billion from the prior quarter. The increase reflects strong operating cash flow as well as positive mark-to-market and favorable FX, partially offset by shareholder distributions.

Adjusted net investment income was $1.78 billion, which was above our previously guided range by approximately $40 million due to higher-than-projected private equity income as well as higher call premium and strong cash flows into the portfolio.

To give you a bit more color this quarter, approximately 87% of investment income was generated by our fixed income portfolio, which is relatively predictable and growing steadily. The balance of our investment income is from private investments and other sources which while growing more quickly are more variable from quarter-to-quarter.

We now expect adjusted net investment income in the fourth quarter to be between $1.775 billion and $1.1 billion next International Life premiums written growth in the quarter of 26.5% included a favorable onetime large transaction of $126 million, without which growth would have been 16.6%.

The contribution from this transaction to life insurance segment income was de minimis. Our core operating effective tax rate was 20.5% for the quarter, which is above our previously guided range due to shifts in mix of income by tax jurisdiction in particular related to prior period development [indiscernible] as a result, we expect our core operating effective tax rate for this full year to be in the range of 19.2%.

I'll now turn the call back over to Karen.

Thank you. At this point, we'll be happy to take your questions.

[Operator Instructions] Your first question comes from the line of David Motemaden with Evercore. Please go ahead.

Happens once a year, it seems like so not too bad. But Just, Evan, I just had a question on the ROE outlook increased to 14% plus from 13% in December. I guess can you just talk through the moving pieces there and where you see upside that incremental point?

Is it net investment income, underwriting either releases or underlying underwriting all of the above. Could you just help me think through the moving pieces there?

Yes. I'll help you think it through conceptually not a worksheet. Look, we -- and I think this is the place where I start the mental model here. And it's 14 plus, by the way, the plus is and an important sign. We have strong and growing earning power -- and as we look forward, we see that enduring. It's growing earnings.

And there are 3 engines of it and so you keep a until model on that. Underwriting life income and our invested asset and so investment income. The growth in underwriting, it's commercial and consumer, P&C, it's very broad-based in non-life, including A&H. Our life earning power growing. Our invested asset and alternative allocation to alternatives. So investment income growing -- each of those, as we look forward, we see good sustainability to growth of earnings.

And then with growth of earnings, it means our capital base obviously with those earnings growth and not earning power. Capital continues to grow. We're trading well as we see it below intrinsic value. And by the way, as you continue to grow earnings, and if it's sustainable, then frankly, your intrinsic value continues to move out. We will buy back above previous trend.

As you saw this quarter, we will continue to do that. And at the same time, we're going to continue to build our invested asset that also contributes to growth of earning power. That's as simple as I believe I can break it down for you.

Got it. That's helpful. And then maybe just following up excess capital. I think in the past, you guys have talked about it as a drag on the ROE. I guess how can we think about that today? I think last time you spoke about it is, I think, a 2-point drag. Any way you could size that today for us.

Yes. Everybody migrates. Me too. And I don't really view it as excess capital because we're earning -- it's accretive to ROE as we deploy it on the invested asset side. to the degree that it isn't supporting insurance underwriting activity. That's what you'll think of as surplus capital.

But we're generating an excellent return on the alternative side, in particular, as we grow that in our invested asset. And the -- so I more think of it that way. But to answer your point directly, it's 2 points or north of 2 points.

Your next question comes from the line of Gregory Peters with Raymond James.

So as I look at your results in the third quarter and for the year, year-to-date, at least the overseas general growth stands out as somewhat of a surprise. And so I was looking for some more color on that. And I guess why I'm a little bit surprised by it is because there's all this talk about pricing pressure among the large multinational types of exposures and in E&S market?

It seems like your business, whether it's London wholesale or the commercial inside overseas generals performing -- outperforming the peer group. So maybe you can shed some color on that.

Yes, I want to correct your mental model, I think. -- the majority -- the vast majority of our overseas general business so P&C is not E&S and it is not large account multinational. The majority of it is middle market, small commercial and consumer business personal lines, automobile, homeowners depending on the territory you're in, we do it selectively, and we talk about it.

A&H business digitally derived direct marketing, agency brokerage vast in Asia, big in Latin America and in the U.K. and on the continent, our business is well diversified, middle market, in particular, and large account business is fundamentally when you get down to it, U.K., parts of the continent, Australia, but that's a better mental model than the one you start with, which is most of the neighborhood that you talked to, which is crowded in London and write and shared and layered trades in E&S and then -- and then large multinational.

And in that business, it's property that is most competitive, which is where the globe is moving in a similar direction. Large account shared and layered, but beginning to show up in parts of middle market. It's property. And when I have any concern about underpricing of business at the moment, it's particularly in parts of that area of property the balance, particularly in most casualty lines is adequately priced or where it's not the market is responding with pricing and to achieve adequacy financial lines bumps around the bottom, so buyer beware.

Great. Thanks for the clarification on that. I guess the second question unrelated, but important is just around the expense ratio. If I look at the year-to-date results on the PC consolidated policy acquisition ratio is up a little bit. Maybe the administration -- administrative expense ratio is holding in line. But I'm just curious what the moving parts are in the acquisition.

Yes, yes. The acquisition is simply is just mix of business, more middle market, small and consumer lines. They run a more favorable loss ratio.

Your next question comes from the line of Ryan Tunis with Cantor Fitzgerald.

So I guess one thing that kind of surprised me maybe it shouldn't. But North America E&S, I'm guessing that's [ Westchester ] still up 7% this quarter. You talked about a transitioning market. Maybe expected growth to be a little bit less there. So just maybe some color on -- yes, I guess, what's driving the solid growth rate there?

Yes. Yes, without giving away competitive secrets, property shrank and it shrank significantly as it should. I mean, gave up rate and we gave up exposure where we can't get paid adequately priced to model for cat, we're simply going to walk away and we are. On the other hand, there are areas of casualty that grew, and we are large in small quietly in small commercial E&S.

We have a very large and growing completely digital capability and that contributes very well to growth. And then we have a few program areas like you'll notice, we're in the pet insurance business and those areas contribute to growth as well.

Got it. And then...

It's diversification again and balance. And it's not achieved overnight. It's what you just patiently do and then it bears fruit over time.

And I guess, the second one, just a broad one, Evan, just from where you're sitting, like on the commercial side globally, in what ways are you seeing the macro impact your business, if at all?

Yes. There is a wildcard. Right now, interesting enough, I'm not seeing a big impact to the macro. U.S. is doing well. So overall, the economy, you can't get away from you. You look at the numbers. Overall, U.S. economy has remained strong, though labor is slowing down and the growth of payroll is slowing, and that's what you saw on the sort of that workers' comp adjustment once a year adjustment payroll numbers. So you see that show up.

Europe is slow in economic growth, but it's been slow it a odious slot. Asia stands up has stood up pretty well. it varies by country within Asia, but it stood up reasonably well Korea is slow right now, but it isn't really impacting the growth of our business too much because of the nature of our kind of products and our distribution. Thailand is impacting on one hand on another and a Singapore does well.

Australia doing quite well economically. So it varies across the board. It's a little volatile, but I don't notice a big impact.

Your next question comes from the line of Matthew Heimermann with Citi.

Evan, I wonder if you could talk maybe about the inorganic growth opportunities in Asia. And in particular, I guess, the impression I'm getting from what's happening in the market there is there might actually be a lot more sellers than there have been historically as people think about where they're at strategically, whether they have scale, distribution, et cetera. So I'd just be curious if you have any comments or color in that regard.

We must be talking to different people because frankly, I haven't noticed that kind of chatter or many sellers in Asia. Most seem to be happy to make a go of it. So I'm not noticing that. I know one thing. I got a dance card that's pretty full. Our plate is very full with organic growth opportunities across consumer, across small, mid in particular, commercial variety of distribution and a whole lot of countries.

So we're just flat out busy growing organically right now. and building capability and reaping what we got. So I haven't really noticed much of that, Matt.

Right. I appreciate that. The other question I have is, if you're willing to entertain it is there's been a lot of chatter about a particular historically wholesale broker moving into the U.S. organically on the retail side. and some big shifts of business away from them, in particular, in the London wholesale market.

I'm just curious from a health of the market through regulatory scrutiny and maybe it's just you buy institutional memories too long. Should we be worried about that type of behavior?

No. I wouldn't. It speaks to some market economy. People make choices. They have their own choice to make. I'm not going to second-guess their own analysis and the strategic outcome of that, that broker is doing what they're doing with their eyes wide open, I assume, and they look at they look at the positive and they look at the negative, and they must see that the positives outweigh the negatives, that's their choice to make.

And it's every other brokers choice to react I'm glad there isn't regulation that somehow impacts the ability of market to make rational choices each on their own. That's not a dynamic market. And by the way, a dynamic market is, by definition, messier.

Your next question comes from the line of Tracy Benguigui with Wolfe Research.

Evan, you said that your balance sheet starting with your reserves have never been stronger. I'm wondering if you could share with us where your reserves sit relative to your central estimate. And any comments about this quarter's North America Commercial Lines favorable reserve development which was slightly down this quarter versus prior quarters.

Tracy, nice try. No. I can -- I will share no detail about our reserve position and our reserve strength beyond what I just said, that's proprietary. So I'm not going to do that. There'll be additional color on our reserves in the 10-Q that will come out. And you can look at those. Our reserves. But I think my comment that our reserves have never been -- I've never seen them stronger stands on its own way.

Got it. Okay. Can you talk a few minutes about your small to middle market commercial business I mean I recognize you have strong field operations, legacy Chubb has built that over 100 years. But I'm wondering if you could discuss where you win business. Is it more by offering a cyber package policies given you're a leader there?

No. That's a -- I would say that's a specialty add-on. We are the second largest writer in the United States of middle market customers. So you start with that. The amount of data that we have, the product, the spread of product that we offer and the capability, and we deliver it both through our branch operation and more supported by technology to enable the process.

Our industry practices business, we are the pioneers the inventors of the notion of industry practice that some others are trying to copy where we offer product and suites of product with wordings designed by industry, it's not just marketing, it's true underwriting and product differentiation in the various customer cohorts because we break down the middle market by industry and specialize across a wide swath of industries targeting customers in those industries.

We segment the middle market between large and sort of middle and then lower middle market, which is a different buyer than the balance of middle market. It's more akin to small commercial and the ability to take the seams out and deliver a customer whether they're small or lower middle and in a totally digital way and to have the broadest suite of products so that you meet all of the customers' needs that way.

Growing marketing capability to be able to segment by geography, where are the customers we our most compelling for, we have the best offering, the growing ability of our software with our people to deliver in that and to do it in a way that drives not just more submission activity but in a close ratio that is superior, that is what Chubb's middle market and small commercial in a nutshell is about, and that is spreading around the globe.

Your next question comes from the line of Brian Meredith with UBS.

I was hoping you could just give us a little update on the global A&H business. Kind of what's the outlook there? I know it's been seeing some declining revenues here year-to-date and in the quarter. What's going on with the business?

Yes, perfect. It was North America that declined. We had a -- and it's not a dog ate my homework. We had a very large customer that we couldn't come to terms with the underwriting, just simply the pricing wasn't going to meet our standard. And so we mutually agreed to part ways on that and that was the end of last year, and that's impacted A&H in North America a year, in fact.

It's a one-off. Internationally, the business is growing on around 7.5%. Asia, in particular, in Latin America, and it's growing and the opportunity is in a number of areas. Our travel-related business is growing quickly because it's 100% digital and our ability to deliver through airlines on an embedded basis or through large travel agencies and an improvement of product and even being able to settle claims on a digital basis has given us a lot of runway on that.

Our direct marketing business, not just by phone, but by a digital direct-to-consumer through, as I've talked about repeatedly. We have over 200 platform partners, but some very large ones like a new bank or in Latin America or Grab in Asia or a [indiscernible] some, et cetera, to their customers through both an embedded and now what we call click to engage or click to call where we marry up voice and direct digital together to be able to sell a higher average ticket product.

It's a very vibrant strategy with a lot of growth runway to it, both non-life, which is what you see disclosed there and on the life side, well remember, 60% to 70% of our business is A&H. So when I look at it going forward, I think about growth in Asia, Latin America, both growth regions, Europe, more flattish.

North America, we see growth picking up. And to remind you, when I say the combined was up 18%, that's work site marketing. And most of that is A&H and then some risk-based life insurance, but it's dread disease, it's hospital cash. So again, that's another proxy of A&H business. We love A&H business around here. 3 decades.

And the second question, maybe you could talk a little bit about the reinsurance business, obviously, a big decline in premium this quarter. What are you seeing in that marketplace? Are you seeing terms and conditions loosening up? And any crystal ball as to what you think 1/1 may look like?

I like it as a buyer.

Look, our reinsurance business, and you know this, we've always run it a bit as we get the joke. We recognize it more as a trade -- and frankly, it's the other side of that same coin of property softening. And we're not going to chase property cat. And once we really like -- unless we think it's priced adequately, and we're disciplined about price model.

There is no sort of gut feel or I observed 1 or 2 quarters where cord activity was light, so something has changed. Magot,please. And so we're disciplined about it. And we will write the business when we're going to get paid adequately and we will shrink when we're not. And there is a pretty good example.

Your next question comes from the line of Meyer Shields with KBW.

Peter, you mentioned that the more volatile components of investment income are growing faster. I was hoping you can get a little bit more color in terms of the underlying thought process and maybe targeted allocations?

I'm sorry, say that again?

So Peter mentioned that non-fixed income -- investment income is more volatile but growing faster than the fixed income component. And I was just hoping to dig a little deeper in terms of what you're thinking and maybe where that goes over time?

Yes. I'm going to give it to Peter in a second, but let's be very careful of more volatile. It's not more volatile in its signature. It's just a question of realized gains versus interest rate income off of a fixed so fixed versus equity base, that's all. But go ahead, Peter.

So we'd indicated before that we're increasing our allocation to private investments, including private equity, and those have -- so we're increasing the allocation and those also have a higher current yield -- so just on that basis alone, that income will grow more quickly over time.

To Evan's point, there will be quarterly fluctuations from things like distributions and realizations. But the current return of that, that will flow through our adjusted NII is higher, plus the total IRR is much higher, and that will help book value compound more quickly.

So think of alternatives as producing and we've said this before, we used our partnership with our long-term partnership with KKR as an example. It will feed a coupon yield of, let's call it, somewhere around 7.5% but on the other hand, it has an IRR to it of 15% plus in that range.

So therefore, it does have a terminal value component to it also. And that's the -- and you see that fluctuate as you do normally in PV.

Okay. Fantastic. That's very helpful. One quick other question. We've had 2 consecutive quarters in North America Personal with really solid top line growth and declining administrative expenses on a year-over-year basis. Is that something that can persist? Is that technology driven?

I like the pattern.

Okay, then.

I think we like to continue patterns that we find that we like. It is part of our strategy. as we -- as we digitize as we -- as AI over time, matures more within the company, we expect our growth of expense growth rate to decline as revenue grows. And over time, we expect the total employee population to clients as revenue grows.

And both technology and AI in various forms at different parts of the process of conducting our business. They continue to mature and continue to take hold sort of business by business. So it takes time, but we're seeing results. It's not a futuristic as we're harvesting now.

Your next question comes from the line of Andrew Kligerman with TD Cowen.

So Evan, I thought the print that you put out in property casualty was literally the best in the world. You had under an 82 combined Net written premium growth was around 5%, but would have been higher were it not for some one-offs. And I appreciate your commentary about the broadness of the business, the geography, the product, the account size and other items.

But diverse companies often mess up. And you gave a good description on your middle market commentary and why that's so good. But how does Chubb stay ahead on tech, on data on underwriters, like what is it that keeps you ahead and doesn't mess up this incredible performance that you've been doing quarter after quarter?

I've been the CEO of this company for 21 years. We have built a culture, a discipline and ability to monitor and survey our discipline and the way we work at an extremely granular level on a real-time basis and culture here means the higher you go, the harder you work, it's an inverted pyramid, and it is a privilege -- and if you don't feel that way and you need a different work life balance, then this may not be the place for you.

The people who embrace this, the management team, we've been together some 15 years, some 20 years, some 25 years. we've been together decades. We've all grown up with the same ethos of how do you run and discipline and manage our business and were fund the mental builders. We love what we do. And so it's granular. You look at the results, but it's the result of those macro results of granular effort across hundreds of businesses and dozens of countries with a management structure that can discipline and drive it on a daily basis.

And we are all traveling and on the ground tirelessly to examine and know our businesses. We love it. We love what we do. And frankly, I've been asked this question of enduring, and that's why I started with it for over 20 years. How are you guys going to keep repeating it. And by the way, you can lose it you can lose it quickly start if you start laying back or getting a little complacent or starting to believe your own stuff that is written about you that you're so great.

We're not. We act like we're chased every day. And this company has only 60-some-odd billion of revenue in a $4 trillion industry. We've got the world in front of us, and that's what drives us. Period.

Very helpful. And then if I could follow up on the -- and I know you don't want to talk about the details of your position and strength in reserves. But could you talk about the casualty development in the quarter -- was it adverse? Was it favorable? Anything by vintage? Just how did it develop in commercial P&C in the third quarter?

Yes. It was overall casualty development was $38 million negative, and that was $104 million in the U.S. and negative and 66 positive internationally.

Got it. And nothing by vintage that kind of stuck out.

No, sir.

Your next question comes from the line of Alex Scott with Barclays.

I really enjoyed that answer on the culture, by the way. But -- my question is on the path to the 14% plus ROE. If I look at just the simple DuPont kind of analysis, it would suggest that, that ROE drag, whether you want to call it excess capital or just lower premium to equity than maybe you could run with.

That seems like the biggest opportunity to increase the ROE quicker, but that wasn't where you went at first with that response. So I was interested in that. I mean you feel like there are things you can do on underwriting life income, growing the business. Like do you feel like you can hit that 14% ROE plus without any contemplation of really hammering the buyback or doing inorganic or something like that.

Correct. Yes. Correct. We're going to, from all we see, we're going to continue to grow income I gave you the parts and pieces of growing income, which is growing earning power. We will continue to build our invested assets, and we will continue to -- with that income, not just loss reserves.

And so capital will build. And at the same time, we will increase our buybacks. We'll do both. As long as we're trading below intrinsic value, and we are trading well below

Got it. Very helpful. And then I wanted to go to the Truck Personal Lines business. I mean it's been doing really well with the amount of growth. Just interested in your views on how you think that would be impacted, if at all, if we see competition heating up in maybe areas of the market where that has more of an impact like direct-to-consumer, et cetera?

Yes. And I think you're referring to high net worth North America? Or are you thinking globally? Or what do you?

Yes, more in North America.

Okay. In North America, I mean, look, competition. It takes what is competition really about -- we have competitors out there who sell at a price significantly below job. And if you are a Chubb customer and we respect our customers.

But if price becomes a real problem for you, then we have 2 or 3 other phone numbers, we'll give you of others who will sell it at a price below us. But it's about service. It's about the richness of product. Anybody who has a claim with Chubb that I know of. I mean there's our reputation. Denver leaves. Our ability in risk engineering.

And again, the richness of the coverage we offer. So it's not just claims service in terms of speed and how we deal with the customer but it's how the richness of that coverage comes alive at that time. It's our broad reach and appetite. We can underwrite a customer anywhere they are. for any kind of home they're in.

We offer the broadest range of coverages from their finds in jewelry to large limits of casualty to yachts and boats anywhere in the world, no one steps up to this. We do define the class yet we're hungry and we're humble about it. We keep stepping up to reinforce and rebuild ourselves. Competition is heating up as it heats up more in at extreme cat concentrated areas.

We can't write it all. I'm not going to try to dominate in any area where, oh, I wrote 100% of the cat market here. Are you kidding me? So there's room for others to come on in and write your share. And by the way, you can write it at an adequate risk-adjusted price. Don't worry. And so competition wanes waxes in it.

It's more about the price in that case, but not the richness of coverage and service that we provide. It's such an enduring franchise, and I couldn't be more proud of it. And I couldn't be a bigger fan.

Ladies and gentlemen, I will now turn the call back over to Karen Beyer for closing remarks. Please go ahead.

Thanks, everyone, for joining us today. If you have any follow-up questions, we'll be around to take your call. Enjoy the day. Thank you.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.