Alex Scott

Alex Scott asked about the impact of regulatory changes in Europe, specifically Solvency II, on RGA's business, including potential increased competition or pricing aggression related to investing in alternatives and private assets. He also inquired about how macro volatility in Japan, such as interest rates and FX, affects RGA's business, creating new opportunities or reducing the opportunity set for in-force and go-forward deployment.

Answer

Axel André, EVP and CFO, highlighted RGA's global presence across multiple jurisdictions and regulatory regimes, noting awareness of benefits from pooling risks and achieving efficiencies. Tony Cheng, President and CEO, added that the majority of EMEA profits come from longevity swaps, which are less impacted by Solvency II changes, and RGA focuses on transactions with both asset and biometric risks. He confirmed no bubbling up of increased competition or pricing aggression from multiline reinsurers due to Solvency II. For Japan, Tony Cheng noted strong tailwinds from regulatory and macroeconomic changes, creating considerable risk transfer opportunities, and RGA's focus on transactions with both asset and biometric risks. Jonathan Porter, EVP and Global Chief Risk Officer, added that higher interest rates are generally positive for RGA, and exposure to disintermediation risk in Japanese asset-intensive business is modest, with protections in place for older and newer vintage products.

Alex Scott asked about the impact of Solvency II regulatory changes in Europe, specifically if they are leading to increased competition or pricing aggression, particularly from multiline reinsurers. He also inquired about the effects of macro volatility (interest rates, FX) in Japan on RGA's business, including new opportunities and inforce deployment.

Answer

EVP and CFO Axel André highlighted RGA's global presence and monitoring of regulatory evolution. President and CEO Tony Cheng noted that most EMEA profits come from longevity swaps, making Solvency II changes less impactful, and confirmed no perceived threat from increased competition. Tony Cheng also stated that Japan offers strong tailwinds from regulatory and macro changes, creating risk transfer opportunities, with RGA well-positioned. EVP and Global Chief Risk Officer Jonathan Porter added that higher interest rates are beneficial, and RGA's Japanese asset-intensive business has modest disintermediation risk.

Alex Scott inquired about Unum's exposure to industries potentially affected by AI-driven layoffs and shared broader thoughts on AI's risks and opportunities for the business.

Answer

Rick McKenney, President and CEO, stated that Unum continuously monitors macroeconomic conditions and AI's potential labor impacts. He noted the company's well-diversified book of business across industries and worker types (60/40 white-collar/blue-collar mix), which helps mitigate sector shifts. He emphasized that historical advancements reshape work rather than eliminate it, and it's still very early to assess AI's full impact.

Alex Scott asked about the strategic implications of moving the Closed Block earnings below the line, viewing it as preparation for life after Long-Term Care (LTC) and potentially facilitating future reinsurance deals. He also questioned the company's exposure to industries potentially impacted by AI-driven layoffs and broader AI risks and opportunities.

Answer

President and CEO Rick McKenney confirmed the move aligns with Unum's ongoing strategy to de-risk and put LTC behind it, including active discussions for further reinsurance transactions of varying sizes. Regarding AI, Rick McKenney stated that Unum's diversified business mix across industries and a 60/40 white-collar/blue-collar split mitigates localized sector shifts, emphasizing that historical advancements reshape work rather than eliminate it.

Alex Scott from Barclays asked for Unum Group's perspective on the Group Disability pricing environment heading into the enrollment period, including the trajectory of pricing from the past couple of years that will impact earnings next year due to contract duration. He also inquired about any observed pressure or repricing activity in leave management across the industry, particularly in the current quarter.

Answer

Chris Pyne, EVP of Group Benefits, characterized the disability pricing environment as normally competitive, emphasizing that disability is a cornerstone product where transparent, case-by-case pricing, combined with long-term stability and integrated solutions, results in fair outcomes. Regarding leave management, Pyne noted it's a significant area with pricing influenced by disability, service fees, and new Paid Family Medical Leave (PFML) states, which are managed through a normal process of setting prices, monitoring experience, and making adjustments within the broader disability block.

Alex Scott inquired about the disability pricing environment heading into the enrollment period, asking for reflections on the pricing environment of the last couple of years that will be earning in next year, and visibility on its trajectory. He also asked about any pressure on leave management across the industry this quarter, potential repricing activity, and how to interpret these trends.

Answer

EVP of Group Benefits Chris Pyne described the competitive environment as normal, emphasizing that disability is a cornerstone product linked to leave management and HCM platforms, where pricing is part of a broader value proposition focused on long-term stability. He noted that Unum is transparent on price and renews case by case. Regarding leave management, Mr. Pyne acknowledged it as a major topic, with pricing elements around fees for services and new Paid Family Medical Leave (PFML) states. He explained that it's a normal process of setting prices, managing experience, and making adjustments, which is absorbed within the overall disability block.

Requested an update on the progress of long-term care (LTC) premium rate increase approvals from regulators and asked about the company's exposure to medical cost inflation across its various business lines.

Answer

The company has achieved approximately 60% of its targeted LTC rate increases, noting the regulatory environment is constructive and the process is now largely administrative. Regarding medical inflation, management stated that Unum's businesses are generally not impacted, as benefits for disability, life, and LTC are typically based on wages or fixed indemnity amounts, not the cost of care.

Alex Scott asked for clarification on persistency trends within Unum U.S. premium growth and sought more detail on the tax-related impact that lowered the LTC block's capital protection level.

Answer

Chris Pyne, head of Group Benefits, clarified that while 2024 persistency was very strong, he anticipates a return to more normalized levels in 2025 as more cases come to market for bidding. CFO Steven Zabel explained the $200 million reduction in the LTC protection level was an expected result of tax friction. As improved interest rate assumptions allowed for the release of premium deficiency reserves, the amount was taxed, but the resulting capital remains within the Fairwind subsidiary to support the block.

Alex Scott inquired about Unum U.S. persistency trends and what level is assumed in the 2025 premium growth guidance. He also asked for clarification on the long-term care (LTC) block's protection level, noting the reduction appeared tax-related.

Answer

Chris Pyne, Head of Group Benefits, explained that after 'super strong' persistency in 2024, a more normalized level is expected in 2025. CFO Steve Zabel confirmed the LTC analysis, stating that a release of the premium deficiency reserve in Fairwind due to higher rates was a taxable event, causing the protection level to decrease from $2.8B to $2.6B. He noted Unum is indifferent as the capital remains within Fairwind to support the block.

Alex Scott also asked about the dynamics that will cause retirement segment spreads to stabilize in the middle of the year, specifically whether it relates to market value adjustments (MVAs) or the 2020 run-off.

Answer

Robin Raju, CFO of Equitable Holdings, stated that both factors contribute. He noted a year-over-year decrease in MVAs in 2025, with no assumed MVA benefits going forward. The run-off of the highly profitable older RILA block (less than 15% of the total RILA block), which had strong margins when Equitable was the sole market player, is also a factor. Raju expects 2-4 basis points of spread compression in the first half of 2026, with spreads stabilizing in the second half, and Net Interest Margin (NIM) growing in line with the general account balance (excluding embedded derivatives). He emphasized that despite spread compression, nominal earnings in the retirement business are growing due to strong organic growth.

Alex Scott asked about the improving cash flow conversion, its underlying drivers, the shift towards certain business types, and the potential upside as these shifts continue. He also sought clarification on the dynamics that will lead to stabilization of the retirement segment's spread in mid-2026, specifically whether it's related to market value adjustments (MVAs) or the run-off of the 2020 RILA block.

Answer

Robin Raju, CFO of Equitable Holdings, confirmed $2.6 billion in total cash upstreamed in 2025 ($1 billion from RGA transaction, $1.6 billion organic), with 50% from asset and wealth businesses showing a nearly 90% conversion rate. He expects 10% cash flow growth to $1.8 billion in 2026, driven by higher asset and wealth earnings and retirement dividends, noting that capital release from the run-off legacy block contributes to cash growing faster than earnings. For retirement spreads, Robin stated it's a mix of both MVAs (with no future benefit assumed) and the run-off of the profitable RILA block (less than 15% of total RILA). He expects 2-4 basis points of spread compression in H1 2026, followed by stabilization, with NIM growing in line with the general account balance (excluding embedded derivatives), and projects mid-to-high single-digit pre-tax growth for retirement.

Alex Scott of Barclays requested an update on the novation process and details on the capitalization of the new Bermuda entity.

Answer

CFO Robin Raju reported that the novation to Venerable was completed in January and the second phase of moving business to Arizona is on track for 2025. He also clarified that the initial funding for the Bermuda entity was already included in the 2024 cash flow results, with future needs factored into forward guidance.

Alex Scott asked for color on the improved mortality trends in the Protection Solutions segment and their sustainability. He also requested an update on the expected cash generation for the year and capital management priorities for 2025.

Answer

CFO Robin Raju stated that mortality is normalizing after a prior pull-forward and that the segment remains on track to meet its $200-$300 million annual earnings guidance. On capital, he confirmed that Equitable expects to reach the high end of its $1.4-$1.5 billion cash generation guidance for 2024, supported by diverse and predictable cash flows, and remains confident in its $2 billion target for 2027.

Alex Scott asked about MetLife's perspective on opportunities and risks related to artificial intelligence, including any exposure to software in its investment portfolio.

Answer

John McCallion, EVP and CFO, MetLife Services and Solutions, emphasized MetLife's diversification across geographies, business types, and risk profiles, supported by its scaled global asset manager. He stated that MetLife's investment portfolio, primarily focused on investment-grade oriented investing, has limited exposure to software, and they do not see it as a significant exposure to the industry or the company.

Alex Scott from Barclays sought clarification on the 2026 corporate adjusted loss outlook of $500 million to $700 million, asking about any specific one-time items or re-segmentation impacts. He also asked about MetLife's perspective on artificial intelligence, including potential opportunities or risks beyond employment sensitivity, and exposure to software in its investment portfolio.

Answer

John McCallion, EVP and CFO at MetLife Services and Solutions, explained that the higher corporate loss outlook for 2026 reflects the impact of reinsurance transactions (Talcott Resolution and Chariot Re) in Q4 2025, which reduced earnings from MetLife Holdings, and seasonal preferred dividends in Q1 and Q3. Regarding AI, he emphasized MetLife's diversified investment portfolio and approach to investment-grade oriented investing, suggesting minimal exposure to software-related risks in the industry.

Alex Scott from Barclays inquired about MetLife's perspective on recent comments regarding private credit investing and potential ratings inflation, asking for details on MetLife's private credit book and rating methodology.

Answer

John McCallion, CFO of MetLife, expressed a constructive view on the credit environment but stressed discipline due to tight spreads, leading to an 'up in quality' bias. Chuck Scully, Chief Investment Officer at MetLife, clarified that MetLife Investment Management (MIM) conducts its own underwriting, not relying on external rating agencies. He stated that 95% of their corporate bonds are investment grade, and even their below-investment-grade exposure maintains an 'up in quality' focus.

Alex Scott inquired about the competitive and pricing environment in group benefits, the growth outlook for 2026, and MetLife's views on private credit investing in insurance, specifically addressing concerns about private letter ratings and ratings inflation.

Answer

Michel Khalaf, CEO of MetLife, described the group benefits market as competitive but rationally priced, driven by short-term product results and customer demand for comprehensive solutions, enabling MetLife to achieve strong growth (4% adjusted PFOs) through retention and disciplined pricing. John McCallion, CFO, and Chuck Scully, Chief Investment Officer, affirmed a constructive credit environment with strong fundamentals but tight spreads, leading to an 'up in quality' bias. They emphasized MIM's decades of experience, proprietary underwriting, and that 95% of their corporate bonds are investment grade, dismissing generic concerns about ratings inflation.

Alex Scott inquired about MetLife's overall sensitivity to interest rates, including its floating-rate asset exposure, and the impact of the changing yield curve on the RIS business. He also asked if the upcoming "New Frontier" strategy would drive returns through revenue growth or expense efficiencies.

Answer

CFO John McCallion stated that a steeper yield curve is generally better for the company and that floating-rate assets and liabilities are well-matched. CEO Michel Khalaf explained that the new strategy will enhance returns through a combination of growing high-return businesses and continuing to improve unit costs, leveraging the company's disciplined execution.

Alex Scott from Barclays sought clarification on Aflac Japan's premium growth guidance, specifically how non-underlying factors like paid-up policies and reinsurance impact the actual premiums. He also asked about Aflac's perspective on artificial intelligence, including opportunities, risks of disintermediation, and any specific investment portfolio exposure to software companies.

Answer

Max Brodén, CFO of Aflac Incorporated, clarified that the underlying premium guidance excludes paid-up policies, deferred profit liability, and reinsurance, with paid-up status being the primary non-underlying factor in Q4 2025. Bradley Dyslin, Global Chief Investment Officer and President, Aflac Global Investments, reported 1.5% credit portfolio exposure to software companies, split between middle market loans and investment-grade assets. Virgil Miller, President of Aflac Incorporated and Aflac U.S., detailed Aflac's AI strategy, focusing on leveraging AI for enrollment, product innovation in Japan, and automating claims processes (over 60% in traditional business) and enhancing agent efficiency in the U.S., emphasizing AI's role as an assistant rather than a replacement for human decision-making.

Alex Scott of Barclays inquired about the reason for the larger-than-usual dividend from Aflac Japan and asked for more details on the company's investments in digitization and AI in that market.

Answer

CFO Max Brodén clarified that the significant dividend from Japan was not a change in policy but a direct result of very strong regulatory earnings for the fiscal year ending March 31, 2025. An Aflac Japan executive detailed their digital transformation efforts, which include using GenAI and digital avatars to improve customer experience and operational efficiency, noting the initiatives are ahead of schedule.

Alex Scott asked about the reason for the larger-than-usual dividend from Aflac Japan and whether it signals a change in dividend policy or reinsurance appetite. He also inquired about the progress of digitization and AI investments in Japan.

Answer

An unnamed executive clarified that the larger dividend was not a policy change but a function of very strong regulatory FSA results for the fiscal year that ended March 31, 2025. Masatoshi Kuide of Aflac Japan detailed their digital transformation, which focuses on improving customer experience with tools like GenAI and digital human avatars, and on boosting operational efficiency, which is running ahead of schedule and helping to control costs.

Alex Scott asked for guidance on how to model the complex corporate segment, given its various components like derivatives and Bermuda reinsurance, and inquired about its expected near-term and long-term trajectory.

Answer

Max Broden, CFO, acknowledged the segment's complexity and identified the key drivers as future reinsurance activity, interest expense, and the accounting for tax credit investments. He explained that Q1 results were affected by lower tax credit investments compared to the prior year and guided that the segment's pretax income should remain positive but generally lower than the Q1 level.

Alex Scott inquired whether Aflac is achieving its targeted IRRs due to levers like reinsurance or if the underlying competitive opportunity remains strong. He also asked about the current capabilities of the U.S. Group Benefits platform.

Answer

CFO Max Broden explained that for Japan life products, strong IRRs are achieved on a post-reinsurance basis, which overcomes new business strain. Virgil Miller, President of Aflac U.S., stated that while individual product platforms are strong, the current strategic investment is focused on integrating them to provide a unified, bundled offering to the market.

Alex Scott, via an associate, inquired about the competitive environment in Japan, with a specific focus on third sector products like medical insurance.

Answer

Koichiro Yoshizumi described the medical insurance market as having severe and continuous competition. He stated Aflac's strategy is to win through product uniqueness, such as its 'monthly coverage' feature, and by leveraging its strong distribution channels. For cancer insurance, he emphasized Aflac's 50-year history, deep expertise, and exclusive sales arrangement with Japan Post as key competitive advantages.

Alex Scott inquired about Everest Group's rate adequacy in property cat compared to 2022, the market's attractiveness for growth, and how the company plans to adjust its market share in property cat as conditions unfold.

Answer

Jim Williamson, President and CEO, Everest Group, stated that property cat offers better rate adequacy and return on capital today than in 2022, partly due to more advantageous program structures. He indicated that Everest might take some capacity off the table, potentially leading to a slight decline in market share, but emphasized focusing on profit-generating capacity. Matthew Jay Rohrmann, SVP, Head of Investor Relations, Everest Group, highlighted the company's strong capital position, expecting lower growth and significant net income. Mark Kociancic, EVP and CFO, Everest Group, added that share buybacks are very attractive given the discounted stock price and will continue in Q1 and throughout 2026, likely exceeding the $200 million quarterly floor.

Alex Scott asked for a comparison of rate adequacy in property CAT to 2022, whether the market remains attractive for growth, and how Everest plans to adjust its market share in property CAT as conditions unfold.

Answer

Jim Williamson, President and CEO, stated that property CAT offers better rate adequacy and return on capital today compared to 2022, citing improved program structures with the absence of aggregates and low-down covers. He emphasized that market share is not a primary focus, but Everest slightly reduced capacity at January 1 and would not be surprised if its absolute market share declines slightly if competitors write more at lower prices. Alex Scott also inquired about Everest's current capital position and its strategy for buybacks in 2026, especially given any potential reduction in underwriting capacity. Mark Kociancic, EVP and CFO, affirmed a very strong capital position, supported by an A+ rating, lower expected growth, significant net income, and anticipated capital releases from the renewal rights transaction. He reiterated that buybacks are highly attractive, with Everest stepping up repurchases in Q4 and planning to continue in Q1 and throughout 2026, exceeding the $200 million quarterly floor.

Alex Scott sought clarification on whether additional conservatism needs to be layered on top of the estimated 95% combined ratio for the retained insurance segment, or if that figure already incorporates the embedded conservatism.

Answer

Jim Williamson, President and CEO, indicated that the lower half of the 90s is a reasonable, conservative approach for booking that business, assuming some conservatism is maintained, and noted that the mix of the portfolio affects the need for conservatism.

Alex Scott asked about the sizing of the $1.2 billion gross protection for the Adverse Development Cover (ADC), specifically how it relates to standard deviations from Everest's point estimate. He also sought clarification on the conservatism embedded in the retained insurance segment's loss picks and its impact on the 'lower half of the 90s' combined ratio.

Answer

Jim Williamson, President and CEO, stated the ADC aims to create finality, viewing the $1.2 billion as reserve margin. Mark Kociancic, EVP and CFO, added that the cover is 'quite broad, quite strong.' Mr. Williamson confirmed that the 'lower half of the 90s' combined ratio for the retained business is a reasonable conservative approach, with conservatism influenced by the managed mix of the portfolio, particularly U.S. casualty exposure.

Alex Scott from Barclays asked for more color on the growth in the Accident and Health (A&H) line, given market pressures like medical cost inflation. He also questioned the strategy regarding reinsurance renewals, focusing on terms and conditions and the trade-off between growth and share repurchases.

Answer

Jim Williamson, President & CEO, clarified that the A&H growth is concentrated in the 'accident' business, such as business travel and participant accident lines, which are low-severity and performing well. On reinsurance, Williamson stated that property cat terms and conditions are holding firm. He noted that since the returns on deploying capital into property cat are highly attractive and exceed the benefits of buybacks, the company has the capital strength to pursue both growth and share repurchases.

Alex Scott asked about Everest's capacity to simultaneously pursue growth opportunities and conduct meaningful share buybacks, and whether underlying primary insurers are taking sufficient action in the casualty market.

Answer

CFO Mark Kociancic affirmed that Everest has the capacity to both support its growth plan and continue meaningful share repurchases. CEO Jim Williamson added that evaluating casualty reinsurance partners goes beyond pricing to include portfolio management and claims handling, noting Everest has already shed approximately $800 million in underperforming North American casualty premium since early 2024.

Alex Scott of Barclays asked about the expected impact of the California wildfires on reinsurance pricing and what key metrics investors should focus on in the 10-K to validate the sufficiency of reserve actions.

Answer

President and CEO Jim Williamson stated the wildfire event should have a positive impact on pricing, creating opportunities for selective deployment. CFO Mark Kociancic advised focusing on metrics like IBNR, ultimate loss ratios, and especially the global loss triangles in the 10-K for granular data, supplemented by management's ongoing commentary on disciplined execution.

Alex Scott of Barclays asked about the timing and top-line impact of the portfolio remediation, noting market competitiveness, and inquired about the long-term strategy for the insurance business post-remediation.

Answer

Executive James Williamson stated that heavy remediation began in March 2024 and is about halfway complete, with the impact already reflected in Q3 and Q4 results. He asserted they do not manage to a top-line number. For future strategy, he described a consistent global approach: to be the first call for brokers placing their best large account specialty clients, a strategy that is performing well outside of U.S. casualty.

Alex Scott requested quantitative metrics, such as paid-to-ultimate ratios or IBNR as a percentage of reserves, to provide evidence for Voya Financial's stated conservatism in Stop Loss reserves, given past negative momentum. He also asked about the opportunities and risks associated with artificial intelligence across Voya's business, including potential disintermediation and concerns about investment portfolios.

Answer

Heather Lavallee, CEO, and Michael Katz, CFO, acknowledged the request for metrics but indicated that Q1 2026 would offer a clearer comparison for Stop Loss, reiterating that the current reserve positioning is prudent due to high uncertainty and a wider range of outcomes. On AI, Heather Lavallee, CEO, highlighted opportunities to improve client experience, drive efficiencies, and support scale, noting Voya's existing use of AI in claims and contact centers, and saw more opportunities than headwinds, with less risk of disintermediation in Voya's core businesses. Matt Toms, CEO of Investment Management, detailed that Voya's general account has minimal direct exposure to broad technology (1%) and software (0.5%) in its bond portfolio, and limited exposure in private and high-yield tech, preferring equity for technology investments.

Alex Scott requested quantitative evidence for Voya Financial's Stop Loss conservatism, such as paid claims or IBNR as a percentage of reserves, and asked about the opportunities and risks of artificial intelligence, including potential disintermediation and software concerns in investment portfolios.

Answer

Mike Katz (CFO, Voya Financial) stated that while specific metrics like paid-to-ultimate are not currently provided, the first quarter will offer clearer light for comparison, reiterating that the 2024 block developed favorably and the 2025 block is positioned similarly. Heather Lavallee (CEO, Voya Financial) highlighted AI opportunities in improving client experience, driving efficiencies, and supporting scale across claims, contact centers, and technology, seeing more opportunities than headwinds and less disintermediation risk for Voya's core businesses. Matt Toms (CEO of Investment Management, Voya Financial) addressed AI's impact on the investment portfolio, noting minimal exposure in the general account's core bond portfolio (1% broad tech, 0.5% software) and limited exposure in private and high-yield portfolios, preferring equity for technology investments.

Alex Scott of Barclays inquired about the Investment Management partnership with Allianz Global Investors (AGI), its impact on distribution, and its current ramp-up status. He also asked how potential strength in Retirement AUM might be balanced between business investment and margin expansion.

Answer

CEO - Voya Investment Management Matt Toms reported that the AGI partnership remains strong, driving growth in private placements and global fixed income distribution, with continued momentum expected. On the Retirement question, CEO & Director Heather Lavallee reiterated Voya's focus on its 2025 priorities, including Employee Benefits margin improvement and the OneAmerica integration. She emphasized disciplined expense management to fund targeted investments, such as the modest build-out of wealth management capabilities.

An analyst from Barclays (on behalf of Alex Scott) questioned the progress of the distribution expansion from the Allianz partnership in Investment Management. They also asked for an update on the net flow pipeline for the Wealth Solutions business.

Answer

Executive Matthew Toms expressed satisfaction with Investment Management flows, which are exceeding the 2% organic growth target, driven by breadth across international retail, fixed income, and strong U.S. intermediary channels. Executive Rob Grubka addressed Wealth Solutions, noting strong commercial momentum with a 25% growth in sales and a 4x increase in mid-market sales. He expects a strong Q4 in recordkeeping and a turn to positive flows in full service next year.

Alex Scott inquired about AssuredPartners' organic growth performance relative to plans and how it underpins current estimates. He also asked for an update on M&A valuations, specifically any differences between larger and smaller acquisitions and recent movements.

Answer

Chairman and CEO J. Patrick Gallagher, Jr. stated that AssuredPartners' organic growth is currently running about 1 to 1.5 points below Gallagher's, but deploying Gallagher's tools to AP's sales force presents a significant opportunity to align their growth. CFO Doug Howell confirmed no dilutive impact on margins once AP is fully integrated into organic numbers by 2027. Mr. Howell also noted that M&A valuations are 'coming down,' with tuck-in acquisitions (over $10 million) now typically in the 12-13x range, a decrease from previous highs of 16x.

Alex Scott from Barclays asked for an update on AssuredPartners' organic growth performance relative to plans and what underpins the current estimates. He also inquired about M&A pipeline valuations, specifically any differences between larger and smaller acquisitions, and recent movements in these valuations.

Answer

Doug Howell (CFO) stated that AssuredPartners' organic growth is running about 1-1.5 points less than Gallagher's, which presents an opportunity to deploy Gallagher's tools to improve their growth. He noted that valuations are coming down, with asks for larger tuck-in acquisitions now in the 12-13 times range, down from 16 times previously.

Justin on behalf of Alex Scott from Barclays asked if the 90% of competition being against smaller independent brokers is expected to dwindle over time due to large-scale M&A in the industry. He inquired about the competitive landscape for 2025 and beyond.

Answer

CEO J. Gallagher responded that the AssuredPartners acquisition will substantially increase Gallagher's 'at bats' against smaller players, as AP competes with independents in communities where Gallagher is not currently present. CFO Douglas Howell reinforced this, noting the market remains highly fragmented with nearly 30,000 brokers, and the combination creates a '1 plus 1 can equal more than 2' opportunity by expanding their collective reach.

Alex Scott asked if Brown & Brown's incentive commissions in 2026 could be negatively impacted by lower premium growth from national carriers facing increased competition. He also sought commentary on Accession's performance and revenue contribution in Q4, especially in relation to previous guidance.

Answer

R. Andrew Watts, Chief Financial Officer, confirmed that there's always a potential for incentive commissions to be impacted by carrier premium growth and measurement targets, noting some of this occurred in 2025. He stated that this is included in the company's commentary unless unusual circumstances arise. Regarding Accession, Mr. Watts expressed satisfaction with its performance and the integration progress, clarifying that the Q4 revenue of $405 million, while below initial estimates, was due to refining revenue recognition and does not change full-year expectations.

Alex Scott asked if lower premium growth from national carriers due to increased competition could negatively impact volume-based incentive commissions in 2026, and if this potential impact is already embedded in the retail organic commentary. He also sought commentary on Accession's performance and revenue contribution in Q4, and its overall growth trajectory.

Answer

R. Andrew Watts, CFO, acknowledged the potential for negative impact on incentive commissions, noting similar dynamics in 2025 as carriers adjust measurement targets, and confirmed this is included in their commentary unless unusual circumstances arise. Regarding Accession, Mr. Watts reported good performance and satisfaction with new teammates. He explained that the Q4 revenue of $405 million (below guidance) was due to refining revenue recognition estimates, but full-year expectations remain unchanged, with integration progressing well.

Alex Scott from Barclays asked for clarification on whether lower new business was a timing issue or due to competition, and if E&S pricing was causing volume to shift back to the admitted market.

Answer

President, CEO & Director J. Powell Brown stated simply that the company wrote less new business in the quarter and that one quarter does not make a trend. He noted that while there is some anecdotal evidence of business moving from E&S back to admitted markets, it is not significant enough to be a major driver of results.

Alex Scott asked for more color on the M&A pipeline, particularly regarding the influence of changing interest rates on private equity activity and the company's primary areas of focus for inorganic growth.

Answer

J. Powell Brown, an executive, noted that private equity interest in M&A, which had slowed as rates rose, is now increasing as rates begin to decline. He reiterated that Brown & Brown's disciplined approach remains focused on cultural fit and financial sense, with active pipelines both domestically and in existing international markets, such as the Netherlands.

Alex Scott asked about the medium-term strategy for technology investments, specifically whether they aim to reduce the expense ratio or enhance competitiveness and growth, and inquired about any observed flow-back into the admitted market affecting growth rates.

Answer

CEO Rob Berkley stated that technology investments aim for 'all of the above' – efficiency, savings, and value creation, with the market determining how much savings are passed to customers. He noted that while the standard market is aggressive, a significant flow-back into admitted lines is not broadly affecting E&S growth, except for very small accounts.

Alex Scott asked how the company views technology improvements (AI, data) over the medium term – whether they will primarily drop to the bottom line or contribute to increased competitiveness and growth. He also inquired if there's a flow back into the admitted market affecting growth, or if competition is mainly within the E&S market.

Answer

CEO Rob Berkley stated that the impact of technology investments is 'all of the above,' aiming for efficiency, savings, and value creation, with the balance between retaining savings and passing them to customers depending on market dynamics. He noted some standard market activity in very small accounts but generally, national and regional carriers in the standard market are being 'remarkably aggressive' within their existing swim lanes.

Alex Scott asked about W. R. Berkley's capital position, including plans for additional capital flexibility and the pecking order for returning capital to shareholders, given the company's growth strategy.

Answer

Rob Berkley, President and CEO, and William Berkley, Executive Chairman, explained that the company has significant excess capital, generating it faster than it can be consumed. They highlighted flexibility in returning capital through dividends and share repurchases, emphasizing patience for opportune buybacks and the use of special dividends.

Alex Scott asked about W. R. Berkley's capital position, including plans for additional capital flexibility and the pecking order for capital return, given observed restraint in growth.

Answer

Rob Berkley (President and CEO) indicated significant excess capital (10 digits headroom by rating agency models) and faster capital generation than consumption. He noted the company is open to returning capital to shareholders via dividends and repurchases. William Berkley (Executive Chairman) added that they are patient with stock buybacks, waiting for opportune times, and use special dividends to acknowledge shareholders, while keeping capital available for future opportunities.

Alex Scott from Barclays asked whether concerns about tariffs and labor costs are forward-looking or currently impacting results, and questioned the future trajectory of margins.

Answer

President & CEO W. Robert Berkley, Jr. clarified that concerns about tariffs and labor costs are forward-looking and not yet materially impacting loss activity. He added that while margins could improve from current levels, the company remains cautious due to several leveraged variables.

Alex Scott of Barclays asked whether the company is observing tangible impacts from potential tariffs and rising labor costs, and questioned the future trajectory of underwriting margins.

Answer

President & CEO W. Robert Berkley, Jr. clarified that concerns about tariffs and labor costs are currently forward-looking and have not yet materialized in the company's loss activity. He expressed confidence that current rate levels are adequate to support or improve margins, but cautioned against premature conclusions.

Alex Scott of Goldman Sachs Group, Inc. inquired about balancing growth and margin preservation, questioning if a period of lower growth is expected given the competitive landscape in reinsurance and property. He also asked about the implications for capital return and leverage, and specifically about price adequacy and growth potential in the primary property insurance business.

Answer

W. Robert Berkley, Jr. (Executive) emphasized the company's unapologetic focus on risk-adjusted returns, stating they will be defensive where margins are inadequate, as shown by the 15% reduction in casualty reinsurance. He expressed confidence in finding growth opportunities, particularly in insurance, aiming for growth in excess of trend. Regarding primary property, he acknowledged increased competition but stated a tailwind still exists, though it has diminished, and it remains a viable area for growth at targeted profitability.

Alex Scott from Barclays inquired about the company's capital position and capacity to deploy it, the strategy for capital returns, and the basis for management's confidence in its loss reserves for recent accident years.

Answer

Executive W. Berkley stated the company has a surplus of capital and is generating it faster than it can be deployed, making continued opportunistic capital returns to shareholders a reasonable assumption. Regarding reserves, he pointed to metrics like the strength of IBNR relative to total reserves and earned premium. He cautioned against broad-brush industry conclusions, emphasizing that WRB's specific mix of business and use of claims-made forms require a more granular analysis than some observers apply.

Alex Scott asked about Travelers' prospects for M&A relative to organic growth, given attractive profitability but lower growth. He also inquired about the impact of tariffs on pricing, particularly in personal auto, as a wider range of outcomes seemed possible.

Answer

Alan Schnitzer (Chairman and CEO, Travelers) reiterated Travelers' consistent stance over the past decade: they are always looking for attractive inorganic M&A opportunities, possessing the capital and expertise to execute deals. Regarding tariffs, Schnitzer stated that the impact has been milder than the modest amount initially expected, and he believes the provisions made in loss picks for potentially impacted lines are sufficient to cover any changes as tariffs persist.

Alex Scott asked about Travelers' prospects for M&A relative to organic growth, given attractive profitability but lower growth. He also inquired about the impact of tariffs on pricing, particularly in personal auto.

Answer

Alan Schnitzer, Chairman and CEO, reiterated Travelers' consistent stance of always seeking attractive inorganic opportunities, leveraging their capital and expertise. Regarding tariffs, Alan Schnitzer stated that the impact was expected to be mild, and provisions made in loss picks for potentially impacted lines have been sufficient, as the observed impact has been less than initially anticipated.

Alex Scott asked if the growth in net written premium for commercial auto and general liability reflects different rate dynamics or specific product launches/strategies. He also inquired about potential increases in Personal Lines marketing spend to ramp up growth and its impact on the expense ratio.

Answer

Greg Toczydlowski, President of Business Insurance, confirmed that Travelers rolled out a new, sophisticated commercial auto product across Business Insurance, which aids segmentation. He stated that the premium deltas in these lines are primarily driven by renewal premium change. Michael Klein, EVP and President of Personal Insurance, noted a marginal increase in marketing spend for the direct-to-consumer business (less than 10% of overall business), but it does not have a dramatic impact on overall financial results.

Alex Scott from Barclays asked if the margin benefit from strong property growth over the past few years might reverse given current pricing pressure in that line. He also inquired about the impact of California's cumulative trauma claims and broader medical cost pressures on the workers' compensation business.

Answer

CFO Dan Fry explained that the modest margin benefit from property mix has already dissipated as property growth moderated, and this is reflected in current results. Greg Tislowski, President of Business Insurance, noted they are managing the cumulative trauma trend in California with specific strategies. CEO Alan Schnitzer added that overall workers' comp loss trends remain favorable to expectations.

Alex Scott asked about the property versus casualty business mix and if a reversal was likely given property pricing pressure. He also inquired about the impact of California's cumulative trauma claims and broader medical cost pressures on workers' compensation.

Answer

CFO Dan Fry stated that the outsized growth in property has moderated and no longer has a meaningful impact on margin mix. Greg Tislowski, President of Business Insurance, confirmed they are actively managing the cumulative trauma trend in California. Chairman and CEO Alan Schnitzer added that overall workers' comp loss trends remain favorable to expectations.

Alex Scott asked if the margin benefit from property growth might reverse as property pricing becomes more pressured. He also inquired about the impact of California's cumulative trauma claims and broader medical cost pressures on workers' compensation loss costs.

Answer

CFO Dan Fry explained that the modest margin benefit from property growth has already dissipated as pricing moderated and is not a significant mix factor now. Greg Tislowski, President of Business Insurance, confirmed they are actively managing the multi-year trend of cumulative trauma claims in California. CEO Alan Schnitzer added that overall workers' comp loss trends remain favorable to expectations.

Alex Scott asked if strong underlying results in Personal Lines would change the company's competitive posture and sought more color on the company's exposure to the California wildfires.

Answer

Michael Klein, President of Personal Insurance, stated their approach hasn't changed, as the property line is not yet delivering target returns and the persistence of favorable frequency is uncertain. Chairman and CEO Alan Schnitzer added that while they have managed wildfire exposure, it's difficult to provide more color on their relative market share in the affected areas.

Alex Scott asked about the implications of the Fidelis Partnership (TFP) setting up a Lloyds syndicate without Fidelis's participation, questioning if it signals increased selectivity from Fidelis or TFP's need to seek capital elsewhere due to declined business. He also inquired about the process for bringing on new underwriting partners, including the tech platform, diligence, and the level of visibility Fidelis would have compared to its existing relationship with TFP.

Answer

Group Managing Director Jonny Strickle clarified that the agreement with TFP grants Fidelis exclusive first access to all business, allowing TFP to place any declined business elsewhere, which is a 'win-win' scenario. CEO Dan Burrows added that TFP remains a strong partner, contributing significantly to growth, and the arrangement effectively matches capital with risk. Dan explained that new partnerships involve a high benchmark, leveraging management's extensive industry experience to identify best-in-class underwriters who complement the portfolio. Jonny Strickle further detailed that the process starts with Fidelis's underwriting and risk strategy, using the flexibility of the TFP agreement to choose the most suitable partner for specific areas, ensuring new partners meet high combined ratio expectations.

Alex Scott asked about the Fidelis Partnership (TFP) setting up a Lloyd's Syndicate without Fidelis's participation, seeking to understand if this indicates increased selectivity by Fidelis or TFP's need to seek capital elsewhere. He also inquired about the diligence process and visibility for bringing on new underwriting partners compared to the integrated TFP relationship.

Answer

Group Managing Director Jonny Strickle clarified that Fidelis has exclusive right of first access to TFP's business, and anything outside Fidelis's appetite can be placed elsewhere, indicating the agreement is working as intended. CEO Dan Burrows added that most of the year's growth came from the partnership, demonstrating alignment. Burrows explained that new partnerships require a high benchmark, complementing the portfolio, and are relationship-driven. Strickle further detailed that the process focuses on underwriting and risk strategy, allowing flexibility to choose suitable partners, with a growing pipeline of market-leading underwriters.

Alex Scott from Barclays inquired about the expected impact on premium growth from the company's disciplined underwriting stance in the aviation market. He also asked how recent results would influence the MGU profit commission going forward.

Answer

CEO Dan Burrows stated that aviation growth will be difficult without significant pricing improvements, as the market has not responded to recent loss activity. CFO Alan Declare explained that the MGU profit commission is based on calendar year GAAP results. With the Russia/Ukraine issue now resolved, strong underlying performance could trigger a profit commission in 2026, and potentially even in 2025, as there is no loss to carry forward.

Alex Scott asked about the competitive environment in the Property market and how Fidelis is able to maintain underwriting discipline, such as pricing in potential tariff impacts, while still achieving its growth targets.

Answer

CEO Dan Burrows credited the company's ability to make real-time portfolio adjustments to its short-tail book and its daily underwriting call. He noted that Fidelis is seeing increased demand as business flows from the admitted to the E&S market. As a market leader, Fidelis gets a first look at deals and can leverage cross-selling opportunities, which allows for disciplined growth.

Alex Scott asked about the potential financial impact if a ceasefire in the Russia-Ukraine conflict led to the return of disputed aircraft. He also requested a loss breakdown between the insurance and reinsurance segments for the California wildfires and asked about resulting market opportunities.

Answer

CEO Dan Burrows stated that while a ceasefire would likely ease asset salvage, he could not comment on the financial impact due to ongoing litigation. He disclosed that the wildfire loss was approximately 75% from the reinsurance book and 25% from the direct book, which was in line with expectations. He reiterated that the event should have a positive impact on pricing.

Alex Scott asked about the growth momentum in Manulife's Asia markets, seeking an outlook for continued sales strength. Alex also inquired about the company's private credit exposure, requesting specific numbers and comments on recent industry criticisms.

Answer

Steve Finch, President and CEO of Manulife Asia, reported strong momentum in Asia with solid sales growth and increased NBV/new business CSM. Trevor Kreel, Chief Investment Officer, stated the below-investment-grade private credit portfolio is around CAD 4 billion, focused on middle-market lending, and has shown strong performance.

Alex Scott asked about the strong growth momentum observed in Manulife's Asia markets, seeking an outlook for continued sales strength over the next couple of years. Additionally, Alex inquired about Manulife's private credit exposure, requesting specific figures for different forms of private credit and comments on recent industry criticisms.

Answer

Steve Finch, President and CEO of Manulife Asia, confirmed strong momentum with NBV up 7% and new business CSM up 18%, driven by broad-based success across multiple markets including Hong Kong, China, Singapore, Indonesia, and the Philippines. He noted strong market fundamentals and customer demand. Trevor Kreel, Chief Investment Officer, stated Manulife's below-investment-grade private credit portfolio is around CAD 4 billion (less than 1% of general account assets), focused on middle-market lending. He noted strong performance and credit experience within loss assumptions, considering it a low-risk spectrum participation.

Alex Scott questioned the drivers of strong margins in the Global Wealth and Asset Management (GWAM) business and its future outlook. He also asked about the P&C reinsurance exposure to California wildfires and its impact on the aggregate risk profile for the upcoming hurricane season.

Answer

Executive Paul Lorentz attributed the strong GWAM margins to a diversified franchise, higher-margin geographies, and disciplined expense management, which he expects to continue. Executive Marc Costantini addressed the P&C risk, stating wildfire exposure is limited and that the overall portfolio risk has been reduced through adjusted underwriting, higher attachment points, and tighter pricing over the last two years.

Alex Scott asked for details on asset management flows, specifically the institutional progress, and whether recent gains reflect lumpiness or a more sustainable long-term trend. He also questioned the medical stop loss business, seeking clarification on unfavorable development from earlier loss picks, remaining cash claims, and the impact on 2026 renewals.

Answer

Ted Maloney, CEO of MFS Investment Management, acknowledged lumpiness in asset management flows but highlighted specific institutional wins, such as a large separately managed account and a collective investment trust, as indicative of longer-term tailwinds despite persistent industry headwinds. David Healy, President of Sun Life U.S., detailed that stop loss unfavorable experience was due to pricing shortfalls (20%), late emergence of prior claims (35%), and the 2025 cohort (under 50%). Kevin Strain, President and CEO, added that while pricing increased significantly, rapid cost increases make it challenging to keep pace.

Alex Scott asked for clarification on asset management flows, specifically whether institutional progress indicates a long-term trend or lumpiness. He also sought details on the medical stop loss unfavorable experience, distinguishing between prior period developments and the current cohort, and its implications for 2026 renewals.

Answer

Ted Maloney, CEO of MFS Investment Management, acknowledged lumpiness in asset management flows but highlighted specific institutional wins (international strategies, target date CITs) as indicative of longer-term trends despite persistent industry headwinds. David Healy, President of Sun Life U.S., and Kevin Strain, President and CEO, detailed the stop loss experience: 20% from known pricing shortfalls, 35% from late emergence of prior claims, and nearly 50% from the 01/01/2025 cohort. They discussed updating loss ratio picks, rising healthcare costs, and maintaining pricing discipline for 2026.

Alex Scott from Barclays requested quantification of the favorable development in the 2024 stop-loss business and asked for an outlook on MFS net flows for the second half of the year.

Answer

President - U.S. Dan Fishbein clarified that about one-third of the adverse experience from the Q4 2024 spike in the stop-loss business has since reversed. CEO of MFS Investment Management Ted Maloney indicated that near-term flow trends, including institutional rebalancing and retail redemptions, are likely to persist, though he remains optimistic about a long-term return to net inflows.

Alex Scott from Barclays requested quantification of the favorable development on the 2024 stop-loss business and asked for an outlook on MFS net flows for the second half of the year.

Answer

President - U.S. Dan Fishbein clarified that about one-third of the adverse experience from the Q4 spike in the 1/1/24 stop-loss cohort has reversed. CEO of MFS Investment Management Ted Maloney stated it is difficult to predict short-term flows but expects current trends of institutional rebalancing and elevated retail redemptions to persist in the near term, though he remains optimistic for the long term.

Alex Scott (Barclays) followed up on the strength of Slide Insurance's balance sheet, seeking comments on IBNR levels, attritional loss booking, and the confidence in favorable prior-year development (PYD) given the benign season. Scott also requested clarification on any catastrophe losses incurred during the quarter.

Answer

Bruce Lucas, Chairman and CEO of Slide Insurance Holdings Inc, explained that as a relatively newer company, Slide initially relied on industry experience for loss reserving but has consistently taken a conservative approach. With increased seasoning and clarity on ultimate loss development, the company is comfortable releasing PYD, as evidenced by over $30 million pre-tax released in Q3. Lucas noted that reserve releases have been a normal phenomenon for Slide towards year-end, reflecting a conservative reserve profile. He confirmed that Q3 2025 was a "cat-free quarter."

Alex Scott with Barclays inquired about Slide's increased share repurchase authorization and the strategic balance between capital allocation for growth opportunities and returning value to shareholders through buybacks, especially if the stock is undervalued. Alex Scott also asked about the competitive landscape in Florida, specifically if national or local carriers are intensifying competition, and how this might impact Slide's organic growth prospects in the state over the coming years. In a follow-up, Alex Scott asked about the underlying strength of Slide's balance sheet, particularly regarding favorable prior-year development (PYD) from property, the levels of Incurred But Not Reported (IBNR) reserves, and the confidence in their attritional loss booking methodology, also asking for catastrophe loss figures for the quarter.

Answer

Chairman and CEO Bruce Lucas affirmed that Slide possesses abundant capital and expanding earnings, allowing the company to aggressively repurchase shares when trading below fair value without compromising accelerated growth initiatives, thereby enhancing shareholder ROE. He noted a stable Florida market with no significant presence from national carriers and limited impact from smaller local carriers, highlighting Slide's record voluntary production in Florida and South Carolina, attributing continued growth to a strong rate structure, reputation, and industry-leading balance sheet. Regarding the balance sheet, Bruce Lucas explained that as a newer company, Slide initially relied on industry experience with a conservative reserving philosophy. With more seasoning and clarity on ultimate loss development, the company is now comfortable releasing favorable PYD, as seen in Q2 and Q3, reflecting a consistently conservative reserve profile. He confirmed the quarter was "cat-free."

Alex Scott inquired about Slide's growth strategy for expanding up the U.S. East Coast and into other states, and asked for comments on the current competitive environment in Florida, particularly regarding national carriers.

Answer

Founder & CEO Bruce Lucas confirmed the expansion strategy, noting recent growth in South Carolina and plans to launch in New York, New Jersey, and California in early 2026, pending regulatory review. Regarding Florida, Lucas described the market as fragmented with no significant resurgence from large national carriers in coastal zones, reaffirming Slide's confidence in its long-term profitability targets.

Alex Scott inquired about shopping and retention trends, comparing customer sensitivity to past upward pricing versus potential future downward pricing. He also asked about Progressive's M&A strategy and why it isn't leveraging its strong capital position for acquisitions.

Answer

President and CEO Tricia Griffith noted high shopping activity, leading customers to engage with Progressive's cancel preservation team. While policy life expectancy (PLE) is affected by policy rewrites, household life expectancy remains relatively flat. She asserted that customers leaving are likely adverse selection, as Progressive believes it offers the most accurate pricing. Regarding M&A, Griffith described it as complicated, citing past strategic acquisitions (ASI for bundling, Protective for fleet). She emphasized the need for the right company, culture, and additive value, preferring to maintain 'dry powder' while a corporate development group continuously scans for opportunities. CFO John Sauerland added that reinvesting in the core business is the primary use of excess capital, followed by dividends and buybacks, with M&A focused on expanding offerings rather than core products.

Alex Scott with Barclays asked about customer shopping and retention sensitivity, comparing reactions to upward pricing versus the potential for lower prices. He also inquired about Progressive's M&A strategy, how it fits into long-term growth, and why the strong capital position isn't being used more for acquisitions.

Answer

Tricia Griffith, President and CEO, noted high shopping activity, leading to policy reviews and rewrites that impact policy life expectancy (PLE) but not household life expectancy. She views customers leaving as adverse selection due to Progressive's accurate pricing. On M&A, she stated it's complicated, with past acquisitions (ASI, Protective) being strategic and additive. John Sauerland, CFO, added that reinvesting in the core business is the primary use of capital, followed by dividends and buybacks, with M&A focused on expanding offerings rather than core products.

Alex Scott asked for more detail on the potential impact of tariffs on loss cost trends, particularly for auto parts and repair costs. He also inquired about how market disruption in homeowners is affecting PIF growth in states like Florida and California.

Answer

CEO Susan Griffith provided a detailed overview of Progressive's granular modeling for tariffs, explaining how they analyze each vehicle's components for compliance to predict cost impacts. Regarding homeowners, she stated they are in a much better position, finishing non-renewals in Florida and being cautious in California, with a focus on growing profitably in less volatile states, especially through bundling.

Alex Scott asked about RenaissanceRe's current assessment of excess capital and its capital management strategy, particularly regarding capital return, if growth opportunities become more limited or flat in 2026. He also sought an update on the situation in California and its potential impact on 1/1 renewals, especially concerning exposure adjustments.

Answer

EVP and CFO Bob Qutub emphasized the company's strong and continuing earnings capacity, leading to consistent capital generation. He stated that RenaissanceRe intends to continue returning capital through share buybacks rather than accumulating it. President and CEO Kevin O'Donnell noted that RenaissanceRe grew in California after wildfires and continues to like the market, as its own rates and terms for wildfire risk mitigate primary market issues. The appetite is to continue to grow if conditions persist.

Alex Scott asked about RenaissanceRe's current assessment of excess capital and its capital management strategy, particularly regarding capital return, if growth opportunities become more limited or flat in 2026. He also sought an update on the situation in California and its potential impact on 1/1 renewals, especially concerning exposure adjustments.

Answer

EVP and CFO Bob Qutub emphasized the company's strong and continuing earnings capacity, leading to consistent capital generation. He stated that RenaissanceRe intends to continue returning capital through share buybacks rather than accumulating it. President and CEO Kevin O'Donnell noted that RenaissanceRe grew in California after wildfires and continues to like the market, as its own rates and terms for wildfire risk mitigate primary market issues. The appetite is to continue to grow if conditions persist.

Alex Scott from Barclays requested more detail on the additional outward reinsurance purchased, including the aggregate cat bond, and asked if the recent reduction in general liability exposure implies a change in view on reserve adequacy.

Answer

EVP & Group Chief Underwriting Officer David Marra confirmed the purchase of additional ceded protection, including an aggregate cat bond and second-event covers, to optimize the net portfolio and protect against multiple large events. President & CEO Kevin O'Donnell clarified that the casualty pullback is a forward-looking portfolio structuring decision and not a reflection of concerns about the legacy book's reserve health.

Alex Scott requested more color on how the estimated California wildfire loss translates from a gross figure to the net impact on the P&L, including cessions to third-party vehicles. He also asked about the performance and remaining exposure on the Tokio Millennium Re reserves.

Answer

CFO Bob Qutub provided a mechanical overview of the loss calculation, starting with the gross loss, which is then reduced by ceded reinsurance and adjusted for reinstatement premiums, with the net impact allocated between the company and NCI partners like DaVinci. Regarding the Tokio Millennium Re (TMR) book, Qutub and CEO Kevin O'Donnell stated that after 4.5 years, the reserves are largely developed, they remain comfortable with their position, and there is still some small capacity left on the adverse development cover.

Alex Scott asked for clarification on the potential impact of MCE remediation on the insurance segment's premium growth estimates, specifically the lagged effect of non-renewals. He also inquired about the repricing efforts in the reinsurance casualty business, asking if underlying primaries are taking sufficient rate to build improving margins, or if it remains a high loss cost environment.

Answer

François Morin (EVP, CFO, and Treasurer) stated that approximately $200 million in non-renewed programs (out of a $1.5B-$1.6B MCE book) has been identified, with the impact on top-line premium expected to begin in Q4, though precise timing is unknown. He noted that strong performance in the middle market business could offset some of this headwind. Nicolas Papadopoulo (CEO) confirmed that Arch believes it is getting more rates than the elevated loss costs in casualty, making it an attractive area to write more business with specialty underwriters who manage limits effectively.

Alex Scott asked for clarification on the potential impact of the MCE remediation on Arch Capital's insurance segment premium growth estimates, seeking a quantitative framework. He also inquired about the reinsurance casualty business, specifically whether underlying primary carriers are taking sufficient rate to improve margins, or if it remains a high loss cost environment.

Answer

CFO Francois Morin stated that approximately $200 million in premium from acquired programs has been identified for non-renewal, which will create a headwind, with impacts starting in Q4 2025 and continuing into future quarters. However, he noted that the attractive middle market business is performing well, with strong rate environments in casualty and property, and Arch expects to make up some of the lost premium there. CEO Nicolas Papadopoulo confirmed that in casualty, Arch believes they are getting more rates than the elevated loss costs, making it an attractive area to do more business with specialty underwriters who manage limits well.

Alex Scott requested an update on the Midcorp remediation progress and the dynamics between the admitted and E&S markets.

Answer

CEO Nicolas Papadopoulo indicated that the integration is progressing, with a key focus on improving the program side of the business over the next 12-18 months. He and CFO & Treasurer François Morin explained that the Midcorp business is distinct from E&S, providing a platform in the admitted mid-market, while casualty risks continue to flow into the E&S market due to social inflation.

Alex Scott asked about personal lines retention, specifically if shopping rates are decreasing as the company laps larger rate increases, and how much this is driven by internal rate actions versus the broader competitive environment. He also inquired about the company's capital position, the rationale behind the 15% common dividend increase, and whether it signals a change in focus regarding growth investments.

Answer

Chairman and CEO Christopher Swift stated that shopping remains elevated in personal auto and home, expecting pricing to moderate in Q4 2025 and 2026, creating growth opportunities. Head of Personal Insurance Melinda Thompson added that switching behavior is higher due to multiple rate cycles, but The Hartford's retention is stable. CFO Beth Costello explained that the dividend increase reflects confidence in the businesses' fundamentals and earnings power, aiming to maintain a competitive dividend, and affirmed it doesn't signal a change in focus from investing for growth.

Alex Scott from Barclays asked about personal lines retention, specifically if shopping rates are decreasing as The Hartford laps larger rate increases, and how this is influenced by the company's pricing versus the broader competitive environment. He also questioned the confidence behind the larger common dividend increase, asking if it signals a slowing growth environment or reflects strong capital for both distributions and growth.

Answer

Chairman and CEO Chris Swift noted that shopping remains elevated but expects personal auto pricing to moderate to high single digits in Q4 2025 and throughout 2026, which should aid competitiveness. Head of Personal Insurance Melinda Thompson confirmed industry-wide elevated switching behavior but stated The Hartford's retention is stable, supported by policyholder education efforts. CFO Beth Costello attributed the dividend increase to strong business fundamentals and earnings power, emphasizing it does not signal a change in focus on growth but rather confidence in sustained performance and capital generation.

Alex Scott of Barclays asked for an explanation of why the Small Business underlying combined ratio increased year-over-year while Middle & Large improved. He also inquired about workers' compensation trends, the impact of California, and whether the all-in pricing for Business Insurance is keeping pace with loss trends.

Answer

Chairman & CEO Christopher Swift attributed the year-over-year change in the Small Business combined ratio to a non-recurring, non-cat weather benefit experienced in the prior-year quarter. For workers' comp, Swift and President A. Morris Tooker stated that pricing is on plan and California remains a very good state for their book. Swift noted that while pricing ex-comp is comfortably above trend, comp pricing turned slightly negative in the quarter, but this has not affected their overall loss picks.

Alex Scott asked about the property market environment, specifically if Ategrity expects to maintain its current property growth rates into 2026, contrasting it with the nuanced casualty strategy, and also inquired about ongoing technology advancements and new initiatives.

Answer

Justin Cohen (CEO) stated that Ategrity began materially raising rates in small to medium-sized property in Q3 2024 and is now lapping those rates, expressing hope to maintain growth by executing their model. Chris Schenk (President and Chief Underwriting Officer) added that Ategrity is integrating standalone tech solutions into a single platform from their innovation lab to enhance efficiency and adapt to evolving technology.

Alex Scott with Barclays followed up, inquiring about Ategrity's plans to expand products into the brokerage area, specifically by potentially moving up market.

Answer

CEO Justin Cohen clarified that the focus is on opening existing products and verticals within the brokerage channel rather than moving 'up market.' President and Chief Underwriting Officer Chris Schenk cited the retail trade vertical as an example and emphasized optimizing current offerings to meet evolving market needs within existing micro-segments.

Alex Scott asked about the impact of Ategrity's business mix shifting towards casualty on liability duration and loss reserves, and requested an update on the progress and growth potential of the Project Heartland initiative.

Answer

CEO Justin Cohen confirmed the shift to casualty extends the liability tail, which is a deliberate result of strong performance and is aligned with their 60-70% casualty mix target. President & CUO Chris Schenk added that Project Heartland is in its early stages with over three dozen partners activated, indicating a significant runway for future growth.

Alex Scott followed up on the growth dynamics between the large market and middle market, asking for views on why large market trends aren't flowing down into the middle or upper-middle market, and expectations for this progression into 2026.

Answer

John Doyle, President and CEO of Marsh McLennan, reiterated excitement for the middle market due to increased global exposure and effective performance, leveraging scale, analytics, specialty capabilities, and global reach. He noted higher penetration in the large account market, where the focus is on finding new ways to advise clients, citing Sentrisk (an AI-enabled supply chain risk assessment platform) as an example of innovation brought to a well-penetrated market.

Alex Scott asked about the Thrive program's potential impact on Marsh McLennan's M&A appetite and its ability to accelerate consolidation within the fragmented insurance brokerage sector over the coming years. He also inquired about the dynamics in the large account market, specifically why the better growth and pricing trends seen in the middle market are not flowing down, and how the company expects this to progress into 2026.

Answer

President and CEO John Doyle stated that the Thrive program is not expected to have a meaningful impact on M&A appetite, reiterating the company's focus on smaller to mid-size deals that enhance capabilities in underpenetrated markets, emphasizing cultural fit and strong fundamentals. Regarding market segments, Mr. Doyle expressed excitement about the middle market's performance, attributing it to Marsh McLennan's scale benefits, analytics, specialty capabilities, and global reach. He noted that in the large account market, where penetration is higher, the focus is on finding new ways to advise clients, citing AI-driven tools like Centrisc for supply chain risk as examples of innovation.

Alex Scott of Barclays inquired about the business impact of rising medical costs and asked for insights on the implementation of AI, its potential financial impact, and how it might change the industry.

Answer

President & CEO John Doyle and Mercer CEO Pat Tomlinson explained that while rising medical costs drive client demand for consulting, most of their US health business is fee-based, limiting the direct revenue impact from medical inflation. On AI, Mr. Doyle and the leaders of all four business segments (Marsh, Guy Carpenter, Mercer, Oliver Wyman) provided examples of current implementations, including enhancing analytics with unique data sets, creating agentic AI interfaces for client portals, and supporting clients' AI strategy, all of which are expected to drive efficiency and create new value.

Alex Scott of Barclays asked about the impact of rising medical costs on the business and inquired about the implementation of AI, its potential financial impact, and its role in industry consolidation.

Answer

President & CEO John Doyle and Mercer CEO Pat Tomlinson explained that while rising medical costs create stress for clients, it drives demand for their consulting services, though much of the U.S. business is fixed-fee. On AI, executives from all four business segments provided examples of its implementation, from enhancing client data interaction at Mercer (Pat Tomlinson) and turbocharging analytics at Oliver Wyman (Nick Studer), to leveraging unique data sets for supply chain and claims insights at Marsh (Martin South) and modeling climate risk at Guy Carpenter (Dean Klisura).

Alex Scott asked for color on pricing trends in the middle market, given the company's index skews large, and inquired about the potential impact of property pricing headwinds in the seasonally important second quarter.

Answer

President and CEO John Doyle explained that the middle market exhibits more consistent pricing, which was up a couple of points in the quarter, in contrast to the more cyclical large-account market. Regarding Q2, Doyle acknowledged the competitive market but emphasized that the long-term cost of risk is rising due to factors like natural catastrophes and inflation, highlighting the need for investment in risk mitigation and resilience.

Alex Scott asked for details on the drivers of Marsh's strong organic growth, given flat U.S. rates, and inquired about the potential benefits to Marsh McLennan's various businesses from an improving environment for M&A and IPOs.

Answer

CEO John Doyle and Marsh CEO Martin South explained that Marsh's growth was broad-based, with strong performance in both U.S./Canada and International. South highlighted a reacceleration in Q4, marking the 16th consecutive quarter of 6% or better growth, driven by improved retention and new business. Doyle noted that an M&A pickup benefits multiple businesses, including Marsh, Mercer, and Oliver Wyman, by creating demand for due diligence and transaction-related products.

Alex Scott of Barclays requested more disclosure on the capital within the Delaware reinsurance subsidiary (BRCD) to better assess the company's valuation. He also asked for insight into why cash flows have underperformed projections despite a highly favorable market environment.

Answer

Executive VP & CFO Edward Spehar directed the analyst to K-filing disclosures for basic numbers on BRCD but stated the most relevant metric is internal cash flow testing, which suggests the entity is appropriately capitalized but not a source of excess capital. Spehar declined to comment on cash flow projections, reiterating that the annual assumption update will be discussed later in the year.

Alex Scott asked about the status of long-term cash flow projections, which appear delayed, and questioned how large the company's growth opportunities could be with greater capital flexibility.

Answer

CFO Ed Spehar confirmed that the midyear target for releasing updated long-term statutory free cash flow projections is no longer realistic, as the firm is prioritizing the simplification of its hedging strategy. CEO Eric Steigerwalt stated that the company is not currently capital-constrained for growth, citing record RILA sales in March, and is focused on balancing profitable growth with pricing discipline.

Alex Scott from Barclays asked for an update on the long-term outlook for normalized statutory earnings, whether the Shield product itself was being changed, and for details on a June reinsurer switch. He later followed up on whether the company had any tactical positioning on interest rates.

Answer

CFO Ed Spehar indicated that while the long-term free cash flow ramp-up is still expected, the timeline has been pushed out. He clarified that changes are to the hedging strategy, not the Shield product's core structure. Head of Product David Rosenbaum confirmed a reinsurer change in June for fixed rate annuities helped sales rebound. Spehar also noted they have no tactical positioning on rates and that a modest Q3 loss was due to yield curve steepening.

Alex Scott from Barclays asked about the net impact of property pricing and reinsurance on underwriting results, and inquired about AIG's capital deployment strategy if growth opportunities diminish.

Answer

Chairman & CEO Peter Zaffino explained that as a major reinsurance buyer, AIG benefits from falling reinsurance rates, which offsets primary property pricing declines and creates no net headwind. He noted that while the property combined ratio might rise slightly, it remains highly profitable. Regarding capital, Mr. Zaffino stated that while capital would be returned to shareholders if growth opportunities don't materialize in the medium-term, he views the current environment as a temporary situation. Don Bailey, EVP & CEO of North America Commercial Insurance, and Jon Hancock, EVP & CEO of International Commercial Insurance, then detailed strong growth opportunities in casualty, financial lines, and global specialty, highlighting robust submission flows and market leadership.

Alex Scott asked if the uncertain macroeconomic environment alters AIG's approach to M&A and capital deployment. He also questioned how the ongoing business mix shift, particularly in North America commercial, impacts the catastrophe budget and the underlying versus all-in combined ratio.

Answer

Peter Zaffino, Chairman and CEO, stated that the uncertain environment does not change AIG's disciplined M&A approach but may create opportunities, reaffirming that capital will be returned to shareholders if no additive deals are found. On mix shift, he explained that Q1 is heavily influenced by property reinsurance renewals and that the portfolio's shift toward casualty lines, which carry higher loss ratios, will be reflected in the overall combined ratio over time.

Alex Scott of Goldman Sachs asked for confirmation that AIG's 10%+ core ROE guidance for 2025 includes the impact from the recent California wildfires and inquired about the key drivers for this performance. He also followed up on specific areas targeted for organic growth and the company's view on price adequacy in property and casualty lines.

Answer

Chairman and CEO Peter Zaffino confirmed the 10%+ ROE guidance includes the estimated $500 million wildfire loss, attributing the confidence to AIG's well-structured global portfolio and reinsurance program. He highlighted strong commercial portfolio performance, planned improvements in global personal lines, and disciplined capital management as key drivers. For growth, an executive (presumably John Hancock) and executive Donald Bailey detailed strong retention and new business momentum in International Commercial, particularly Global Specialty and Marine, and in North America Commercial, led by Lexington, emphasizing a disciplined, risk-adjusted approach.

Alex Scott of Barclays asked about AIG's capacity to increase leverage for growth or M&A and requested an update on the North America Personal Lines MGA structure's path to profitability.

Answer

Chairman and CEO Peter Zaffino confirmed AIG has the flexibility to increase leverage from its current low levels for compelling opportunities, while noting the company intends to grow into its current capital base. Regarding Personal Lines, he stated the transition is progressing well, with the acquisition ratio expected to improve in 2025 as ceding commissions decrease. He highlighted the successful pivot to E&S, which saw 20% rate increases and comprised 50% of new business in the quarter.

Alex Scott inquired about Jackson Financial's priorities for its significant excess capital and free cash flow, specifically asking about the pecking order between upsizing capital returns and pursuing M&A. He also asked how rising AUM levels from equity market performance would impact future earnings and margins.

Answer

CEO Laura Prieskorn reiterated the company's 'earn it, then pay it' philosophy. CFO Don Cummings added that Jackson pursues a balanced approach of strengthening the balance sheet, investing in growth, and returning capital to shareholders, viewing them as concurrent goals. Regarding AUM, Cummings acknowledged the strong market impact and noted that while G&A expenses are fixed, some asset-based commissions are variable, creating a partial offset to margin expansion.

Alex Scott of Barclays inquired about Jackson Financial's priorities for its growing excess capital, specifically the balance between increasing shareholder returns and pursuing M&A. He also asked how the recent rise in AUM due to strong equity markets would translate into earnings and margins in the latter half of the year.

Answer

CEO Laura Prieskorn reiterated the company's 'earn it, then pay it' capital philosophy. CFO Don Cummings added that Jackson views capital allocation as a balanced approach, enabling simultaneous investment in business growth, balance sheet strength, and shareholder returns, rather than an 'either/or' decision. Regarding AUM, Cummings acknowledged the strong market impact and noted that while general expenses are fixed, some variable costs like asset-based commissions would slightly offset margin expansion from higher AUM.

Alex Scott of Barclays inquired about Jackson Financial's priorities for its significant excess capital and free cash flow, questioning the balance between increased capital returns and M&A. He also asked how rising AUM from strong equity markets would impact earnings and margins in the latter half of the year.

Answer

CEO Laura Prieskorn reiterated the company's 'earn it, then pay it' philosophy. CFO Don Cummings added that Jackson will maintain a balanced approach, supporting the balance sheet, investing in growth, and returning capital to shareholders, noting they can do both simultaneously. Regarding AUM, Mr. Cummings confirmed that while higher AUM boosts fee income, some variable expenses like asset-based commissions would provide a partial offset to margin expansion.

Alex Scott inquired about the long-term strategy for PPM America and its potential to become a larger part of Jackson's overall strategy. He also asked about the sustainability of the strong free capital generation in 2024 and whether it was inflated by favorable market conditions.

Answer

CEO Laura Prieskorn affirmed that PPM is a core part of Jackson's business. Craig Smith, President and CIO of PPM, added that PPM operates across five verticals for both Jackson and third parties and is actively growing, citing the recent hire of an emerging market debt team. On capital generation, CFO Don Cummings noted that the 2024 result included a one-time tax benefit and that the forward guidance of over $1 billion for 2025 is based on reasonable equity market assumptions, indicating confidence in its sustainability.

Alex Scott from Barclays asked about recent trends in the construction market, specifically if there has been any pickup in project activity, and requested more detail on the potential revenue benefits from the new Nationwide reinsurance mandate.

Answer

CEO Timothy Turner explained that while submission flow for construction remains strong, project binding periods have been prolonged due to higher interest rates, though the renewable policy side of the business is steady. Regarding the Nationwide deal, Founder & Executive Chairman Patrick Ryan highlighted the strategic fit, while CFO Janice Hamilton advised that revenue would be realized over time, subject to renewal attrition and typical seasonality, but did not provide a specific financial forecast for the new business.

Alex Scott asked for more detail on technology spending, its future contributions to growth and efficiency, and whether the spend was front-loaded in Q1. He also inquired about expectations for the property-heavy second quarter, given the challenging rate comparisons.

Answer

CEO Tim Turner explained that technology investments are focused on streamlining workflows, system consolidation, and experimenting with AI to reduce cycle times and empower producers. Regarding Q2, CFO Janice Hamilton acknowledged it is their largest property quarter and faces a 'tough comp' from the prior year before rates decelerated. She reiterated the expectation for modest property growth for the remainder of the year, a sentiment echoed by Mr. Turner, who noted the guidance does not assume a material improvement in property market conditions.

Alex Scott asked about the trends in the Excess & Surplus (E&S) market for casualty lines, specifically regarding volume flow amid rising loss costs. He also requested clarification on the company's business allocation between property and casualty to better understand the offsetting impacts as property pricing moderates.

Answer

An executive, likely CEO Timothy Turner, responded that the casualty market continues to firm, particularly in high-hazard verticals like transportation and product liability, which is driving double-digit growth into the E&S channel. He confirmed the company's business mix remains approximately two-thirds casualty and one-third property, and expressed a bullish outlook on casualty's momentum continuing into the fourth quarter.

Alex Scott of Barclays questioned the drivers behind the strong growth in the captives business, asking if it was sensitive to market softening. He also asked about the Accident & Health (A&H) business's exposure to medical cost inflation and how Skyward is managing that risk.

Answer

CEO Andrew Robinson attributed the captives growth to an innovative property-focused captive for auto dealers that uses proprietary weather technology. For A&H, he explained that growth is driven by group captives, which enhances their ability to manage medical costs through methods like reference-based pricing and negotiating large bills before payment, a key differentiator from the typical 'pay and pursue' approach.

Alex Scott asked for details on the drivers of strong growth in transactional E&S and inquired about the gross-to-net premium ratio expectation for Q4, given the prior year's quota share cancellation.

Answer

CEO Andrew Robinson attributed transactional E&S growth to a great team and strong submission flow, with pricing remaining attractive despite some competition. CFO Mark Haushill advised assuming a low 60s gross-to-net ceded premium ratio for the full year. Andrew Robinson added that Q4 should be a clean comparable, unlike Q3, and that the ratio will naturally rise over time as the company's risk appetite increases and the high-cession Global Property book shrinks as a percentage of the total.

Alex Scott from Barclays requested more detail on policy retention trends across different channels and asked for an update on Allstate's strategy in the California homeowners market, particularly as regulatory moratoriums begin to sunset.

Answer

Mario Rizzo, President of Property-Liability, explained that retention has stabilized but remains down year-over-year due to industry-wide affordability issues prompting more consumer shopping. Regarding California, Tom Wilson, Chairman, President & CEO, noted the market is currently dysfunctional but could work. Mr. Rizzo added that recent regulatory moves on wildfire models and reinsurance cost recovery are constructive, but Allstate is still reviewing the details and is not currently writing new business there.

Alex Scott asked for more detail on customer retention trends and the SAVE program's expected impact. He also followed up on capital capacity, questioning how Allstate views its ability to handle adverse loss trend outcomes given its current premium-to-equity leverage.

Answer

Thomas Wilson (executive) and Mario Rizzo (executive) explained that while retention remains a focus, the overall PIF growth is the key metric. The SAVE program is designed to reduce customer defections by improving affordability and service. On capital, Wilson and Jesse Merten (executive) asserted that Allstate is in a 'really strong capital position,' with a rebuilt 'stress layer' in their economic capital model designed to absorb volatility, making the premium-to-surplus ratio a crude measure.

Alex Scott of Barclays asked for more detail on the specific drivers of growth in the Group business, particularly regarding distribution and platform capabilities. He also inquired about the potential for an external reinsurance solution for the legacy life block, including the market environment and possible transaction structures.

Answer

CEO Ellen Cooper stated that Group growth is driven by a combination of factors, including a targeted segment strategy, dedicated distribution teams, strategic broker relationships, and significant investment in digital capabilities and InsurTech integrations. CFO Chris Nezepore described the reinsurance market as 'robust' and confirmed the focus is on the legacy life block. He noted that having excess capital provides more flexibility in structuring a potential deal, but it remains one of several options being explored.

Alex Scott of Barclays inquired about the competitive environment in the annuities market and asked if the Bain Capital partnership could lead to further product expansion beyond the initially announced initiatives.

Answer

CEO Ellen Cooper responded that while the annuity market is competitive, Lincoln focuses on profitable growth through its broad distribution, unique product features, and optimized investment strategy. Both Cooper and CFO Christopher Neczypor emphasized that the Bain partnership is a strategic platform for future growth, enabling the exploration of adjacent opportunities by leveraging Lincoln's distribution and Bain's asset management expertise.

Alex Scott from Barclays followed up on the strategy to capture 401(k) outflows into other Principal products and how to track its success. He also asked for the company's perspective on offering private investments in defined contribution (DC) plans.

Answer

President of Retirement & Income Solutions, Christopher Littlefield, and CEO Deanna Strable described the outflow capture as a long-term build focused on advice capabilities, noting it will take time to emerge in financials. On private assets in DC plans, the executive team, including Asset Management CEO Kamal Bhatia, expressed support for the concept, citing their experience, but cautioned that adoption will be slow due to fiduciary concerns, similar to the rollout of in-plan retirement income solutions.

Alex Scott of Barclays asked about the specific strategies being used to improve net flows in the PGI and RIS segments. He also inquired about the company's sensitivity to changes in interest rates.

Answer

Executive Kamal Bhatia detailed PGI's strategy of focusing on a robust RFP pipeline and expanding international equity and private credit capabilities. Executive Christopher Littlefield reiterated that RIS is prioritizing profitable revenue growth over raw flow volume. President and COO Deanna Strable-Soethout stated that interest rate sensitivity is now very low with virtually no net exposure to floating rates, a result of the earlier fixed annuity transaction.

Alex Scott from Barclays asked for color on the decline in reinsurance premiums and for an update on Chubb's view of excess capital and its deployment priorities, including M&A.

Answer

Chairman & CEO Evan Greenberg explained the reinsurance premium decline was due to the non-repeat of a large structured deal from the prior year and disciplined underwriting on property-related business. Regarding capital, he stated it is deployed in ways accretive to ROE to support insurance and investment operations, providing flexibility for organic or inorganic growth, while also being returned to shareholders via dividends and buybacks.

Alex Scott from Barclays asked for color on the decline in reinsurance premiums and for an update on Chubb's view of excess capital and its appetite for M&A.

Answer

Chairman & CEO Evan Greenberg clarified the reinsurance premium decline was due to the non-repeat of a large structured deal from the prior year, and that underlying growth was muted as Chubb remained disciplined on inadequately priced property business. Regarding capital, he stated it is deployed in accretive ways to support insurance and investment operations, while maintaining flexibility for opportunities and returning excess to shareholders.

Alex Scott asked for an update on the casualty market, specifically whether pricing adequacy has reached a point where it represents a more interesting growth opportunity. He also inquired about Chubb's view of the reinsurance market heading into renewals.

Answer

Chairman and CEO Evan G. Greenberg confirmed that casualty lines are achieving necessary rate increases in both large account and middle market segments, and as a result, Chubb is growing its casualty exposure. Regarding reinsurance, he stated that as a buyer, the approach is 'steady as she goes.' As a seller, he noted that the Global Reinsurance business grew during the quarter, with opportunities in both property and casualty.

Alex Scott asked about Chubb's future approach to the California market after the wildfires and whether the event could impact broader property pricing.

Answer

Chairman and CEO Evan G. Greenberg described California as a difficult market due to rate suppression, which has led Chubb to reduce its exposure in the wildfire-affected area by over 50%. He called the state's insurance model unsustainable. He noted it is too early to determine if the event will broadly impact property pricing, as that depends on the final loss amount and its distribution across the industry.

Alex Scott of Barclays asked for an opinion on overall price adequacy in casualty lines and inquired about the drivers behind the growth in the company's invested asset base.

Answer

Chairman and CEO Evan G. Greenberg stated that casualty price adequacy cannot be generalized, as it varies significantly by product, geography, and customer segment. He rejected the premise that an elongated claims cycle was driving asset growth, instead attributing the larger invested asset base to strong business growth and healthy margins, which he views as a source of strength.

Alex Scott requested an update on the strategic partnership with Nippon Life, including potential commercial collaborations. He also asked how the asset portfolio is expected to perform in a potential credit event scenario.

Answer

CEO Kevin Hogan described the relationship with Nippon Life as very positive, noting they are taking a structured approach to identifying mutually beneficial commercial opportunities. Regarding the portfolio, both Hogan and CFO Elias Habayeb expressed confidence in its resilience, citing a high-quality (95% investment grade), diversified, and liability-driven strategy. Habayeb highlighted proactive risk management, strong covenants in private credit, and a strong balance sheet as key mitigants to credit stress.

Alex Scott from Barclays asked for details on the drivers of expected cash flow growth in 2025, given spread compression, and questioned the company's next focus for balance sheet optimization now that the Bermuda reinsurance entity is established.

Answer

CFO Elias Habayeb explained that cash flow growth is supported by diversified revenue sources, expense reductions, and the financial flexibility provided by the Bermuda entity. CEO Kevin Hogan added that balance sheet optimization will continue through asset portfolio work, further opportunities for reinsurance (both internal to Bermuda and external), and an expected recovery in variable investment income (VII).

Alex Scott asked about the yen hedging program's impact on the ESR ratio and questioned the strength in the Life Insurance segment's core earnings despite it being cited as a headwind.

Answer

CFO Yanela Frias explained that Prudential hedges its equity in Japan, not its earnings, and this program is factored into its ESR capital assessment. She clarified that the core earnings strength in Individual Life is sustainable and reflects profitable, capital-efficient new business, which is distinct from the headwinds caused by the runoff of the legacy GUL block.

Speaking on behalf of Alex Scott, an analyst asked for the specific impact of higher surrender charges in the quarter, how it compared to the prior quarter, and for the outlook on flows for funding agreements and Pension Risk Transfer (PRT) into the new year.

Answer

CFO Wendy Young addressed surrenders, noting that elevated levels will likely persist with higher interest rates and guided analysts to the last twelve months' ROA of 126 basis points to smooth out quarterly volatility. CEO Chris Blunt added that the quarter-over-quarter difference was not substantial. On the sales outlook, Blunt expressed strong optimism for retail growth, noted PRT sales have already surpassed the prior year's total with a target of $2-$4 billion annually, and characterized funding agreements as opportunistic.

Alex Scott asked for clarification on free cash flow performance, questioning if there were any timing-related abnormalities, and inquired about the key drivers of the strong net new business results.

Answer

CFO Edmund Reese stated that free cash flow is performing as expected, despite impacts from known extraordinary items like NFP integration and legal costs, and reaffirmed the long-term double-digit growth target. President Eric Andersen added that net new business success was strong across priority areas like construction and with large enterprise clients needing complex solutions. Reese emphasized that generating 10 points of growth from new business is a normal and key driver for Aon.