Tracy Benguigui

Tracy Benguigui sought clarification on the net investment income allocation to other segments starting Q1 2026, asking if it was included in the redefined 2025 EPS of $7.93 and its estimated size.

Answer

Steve Zabel, CFO, clarified that the investment income allocation change is prospective and was not included in the recast 2025 EPS, which only reflected the Closed Block redefinition. He estimated the impact to be about $5 million per quarter, distributed across core businesses.

Tracy Benguigui asked about the factors driving the projected improvement in statutory earnings to $1.2-$1.4 billion in 2026, given the implied $100 million in Q4 2025 statutory earnings. She also sought clarification on whether the net investment income allocation to other segments, starting Q1 2026, was included in the redefined 2025 EPS of $7.93 for comparison purposes, and its estimated size.

Answer

CFO Steve Zabel explained that Q4 2025 statutory earnings were slightly below expectations due to GAAP margin challenges and reinsurance transaction cleanup, but Unum still met its capital deployment targets. The 2026 statutory earnings outlook is anchored on GAAP income projections, driven by core business top-line growth, productivity, and benefit ratio stabilization. He clarified that the net investment income allocation was not included in the redefined 2025 EPS, as it's a prospective change, estimated to be about $5 million per quarter, distributed across core businesses.

Tracy Benguigui from Wolfe Research asked if Unum Group's Q4 statutory reserve review would consider the same experience-side and strategic update factors as the GAAP review, or only a subset. She also inquired if medical advances like GLP-1 drugs influenced the morbidity improvement assumption adjustments.

Answer

CFO Steve Zabel confirmed that all GAAP changes have already been factored into their view of statutory results as of 9/30, with booking in Q4. Regarding morbidity improvement, Zabel stated they cannot directly link it to specific medical advances like GLP-1s, attributing the assumption removal to increased modeling uncertainty post-COVID. CEO Rick McKenney added that such medical advances are not factored in until their direct impact on the block is observed.

Tracy Benguigui asked if Unum's fourth-quarter statutory reserve review would consider similar factors (experience and strategic updates) as the GAAP review, or only a subset. She also inquired if the morbidity improvement assumption changes reflected medical advances like GLP-1 drugs.

Answer

Chief Financial Officer Steve Zabel confirmed that Unum has already evaluated every GAAP change for its statutory work and understands the results, which will be booked in the fourth quarter. Regarding morbidity improvement, Mr. Zabel stated that Unum cannot draw a direct link between specific causes like GLP-1s and the assumption. The decision to remove the assumption was primarily due to increased modeling uncertainty post-COVID, as the trend hadn't fully re-emerged. President and CEO Rick McKenney added that Unum waits to see actual impacts on its block before factoring in such medical advances.

Tracy Bengigui followed up on the lower PMLs to equity at January 1, asking if it was a result of deliberately reducing exposure to less profitable deals or an effort to improve capital efficiency by lowering PML to equity targets.

Answer

Jim Williamson, President and CEO, Everest Group, clarified that the lower PMLs are a function of market opportunities, as individual deals not meeting return standards are cut back due to rate decreases. He also noted a hedging component through Mount Logan, where more premium and PML are ceded to third-party investors. He expects these trends to continue. Regarding social inflation and energy losses, Jim Williamson distinguished social inflation as a persistent reality in U.S. casualty (leading to reduced casualty book) from the episodic, non-casualty energy losses in Q4, which were unrelated refining explosions and not impacted by social inflation.

Tracy Benguigui followed up on the lower PMLs to equity at January 1, asking if it was a result of deliberately reducing exposure to less profitable deals or a strategic move to improve capital efficiency by lowering PML to equity targets.

Answer

Jim Williamson, President and CEO, clarified that the lower PMLs are a function of market opportunities, as individual deals sometimes fail to meet Everest's standards due to rate decreases, leading to selective exposure reduction. He also noted that increased fundraising in Mount Logan contributes by ceding more premium and PML to third-party investors, which boosts returns, and these trends are expected to continue. Tracy Benguigui also asked whether social inflation driving several large energy losses in the wholesale business, which led to an elevated insurance attritional loss ratio in the quarter, was an episodic event or indicative of persistent pressures, given earlier comments on insurance casualty pricing. Jim Williamson clarified that social inflation is a persistent reality in the U.S. casualty market across both divisions, which Everest underwrites against. He stated that the large energy losses in Q4 were episodic, unrelated, and not casualty losses, thus not impacted by social inflation.

Tracy Benguigui asked about the breadth of the search for an ADC partner and details on the fronting carriers, given that Longtail Re is a non-rated reinsurer.

Answer

Jim Williamson, President and CEO, and Mark Kociancic, EVP and CFO, confirmed a comprehensive search with Gallagher Re, highlighting the use of two rated fronting carriers (State National and MS Transverse) to mitigate counterparty credit risk, and a pre-existing relationship with Stoneridge Asset Management.

Tracy Benguigui asked about Chubb's strategy for increasing private investments from 12% to 15% of total investments, specifically if diversification credit from growing the life business would offset the high risk-based capital consumption of private equity. She also inquired about the cultural reception from underwriting and claims employees to the AI digital agenda and business transformation.

Answer

Peter Enns, CFO of Chubb, clarified that the private investment growth is not specifically tied to life business diversification, though some private equity is allocated to life and Asian markets. Evan Greenberg, Chairman and CEO of Chubb, added that they are mindful of capital draw and expect private investments to be ROE accretive. On the cultural aspect, Mr. Greenberg described Chubb's culture as adaptable, meritocratic, disciplined, and accountable, expressing confidence that the vast majority of colleagues globally would embrace the transformation, learn new skills, and be flexible.

Tracy Benguigui asked if Chubb's target to increase private investments (12-15% of assets) would be offset by diversification credits from its growing life business, given the high risk-based capital consumption of private equity. She also inquired about the cultural reception from underwriting and claims teams to the AI digital agenda and transformation.

Answer

Peter Enns, CFO of Chubb, clarified that the private investment allocation is not specifically tied to life business diversification, though a modest portion goes to life and Asian markets. Evan Greenberg, Chairman and CEO of Chubb, added that they are mindful of capital draw and that private investments are accretive to ROE. On culture, Mr. Greenberg described Chubb's culture as adaptable, meritocratic, disciplined, and accountable, expressing confidence that the vast majority of colleagues would embrace the transformation and learn new skills.

Tracy Benguigui requested more detail on the Brokerage segment's organic performance in Q4, specifically for specialty U.S. wholesale (which was ahead of plan) and reinsurance (which was behind). She also asked how the 1/1 reinsurance renewals might influence 2026 organic revenue and questioned the feasibility of closing a large volume of deals (65+ for $10 billion dry powder) and alternative deployment strategies if M&A targets are not met.

Answer

CFO Doug Howell explained that the slight variance in reinsurance organic growth (8% vs. 10% forecast) represented a small dollar amount ($1.5 million) due to Q4 being a small quarter for reinsurance. Specialty U.S. wholesale's stronger performance was attributed to a robust month-end. He clarified that 1/1 reinsurance renewals were not worse than expected, with clients opting for more coverage. Chairman and CEO J. Patrick Gallagher, Jr. emphasized their field-based acquisition strategy, with hundreds of offices sourcing deals, enabling them to complete numerous smaller acquisitions weekly. Mr. Howell noted they completed 59 deals in 2014 (when half their current size) and are confident in executing 50-75 deals annually, leveraging global opportunities and the large number of baby-boomer-run agencies seeking succession plans.

Tracy Benguigui with Wolfe Research asked for color on Arthur J. Gallagher & Company's Q4 organic revenue performance in specialty U.S. wholesale (ahead of plan) and reinsurance (behind plan), and how 1-1 reinsurance renewals might influence 2026 organic revenue. She also questioned the feasibility of closing a large volume of deals to deploy the $10 billion M&A dry powder and alternative deployment strategies if that volume doesn't materialize.

Answer

Doug Howell (CFO) clarified that the difference in reinsurance organic growth (8% vs. 10% forecast) was due to a small dollar amount ($1.5 million) in a small quarter for reinsurance. Specialty U.S. wholesale was slightly better due to strong year-end placements. J. Patrick Gallagher, Jr. (Chairman and CEO) emphasized their unique ability to execute numerous smaller deals through hundreds of local offices and their readiness for larger acquisitions. He cited past years with 50-75 deals annually, expressing confidence in their M&A program's continued success.

Tracy Benguigui inquired about the accident years used in Brown & Brown's contingent commission formula and whether the company is still benefiting from harder market years. She also sought clarification on the cadence and business mix of the $23 million revenue reduction from 275 employee departures.

Answer

R. Andrew Watts, Chief Financial Officer, explained that contingent commission calculations are generally short-term, often over a 12-month horizon, but can include rolling two or three-year periods, especially for property-related components. He noted that the $23 million revenue loss was from a mix of business, weighted more heavily towards employee benefits, and would likely impact earlier parts of the year. J. Powell Brown, President and Chief Executive Officer, clarified that the 275 departures included a small portion of producers, with the vast majority in non-production roles.

Tracy Benguigui asked about the accident years used in the contingent commission formula to understand if the company is still benefiting from harder market years. She also sought clarification on the cadence and composition of the $23 million revenue reduction from the 275 departures, specifically if it was heavily weighted towards employee benefits and if there was any impact in the current quarter.

Answer

R. Andrew Watts, CFO, explained that contingent commission calculations are generally based on a 12-month horizon, sometimes rolling 2-3 years, with quarterly movements due to true-ups, advising an annual assessment. He confirmed that the $23 million revenue impact was more heavily weighted towards employee benefits, with the impact likely to be seen earlier in the year. J. Powell Brown, CEO, clarified that the 275 departures referred to 'people,' not just 'producers,' with the majority in non-production roles.

Tracy Benguigui inquired about the workers' compensation market, specifically medical inflation trends outside of California and the reasons for the reduction in premiums during Q4 2025. She also asked about the nearer-term Return on Equity (ROE) expectations, given the company's long-term 15% goal and capital return strategy.

Answer

CEO Rob Berkley confirmed that medical inflation is a long-standing issue impacting workers' compensation and that the Q4 premium reduction was primarily exposure-based. He stated that the company has strong momentum in underwriting and investments, expecting another very good year in 2026, which is setting the table for 2027.

Tracy Benguigui asked for further commentary on the workers' compensation market, specifically regarding medical inflation trends and the exposure-based reduction in Q4 premiums, and sought clarification on the nearer-term ROE outlook given the company's capital return strategy.

Answer

CEO Rob Berkley acknowledged that medical costs and claims activity in workers' comp have been artificially suppressed, and the Q4 premium reduction was primarily exposure-based. He stated that the company is currently 'firing on all cylinders' with strong momentum in underwriting and investments, suggesting another very good year for returns, barring unforeseen events.

Tracy Benguigui inquired about the industry's excess capital, potential competitive pressures from growth-focused peers, and catalysts for a pricing turnaround. She also asked for details on auto exposure reduction versus pricing.

Answer

Rob Berkley, President and CEO, stated W. R. Berkley focuses on risk-adjusted returns and is prepared to shrink business if competition becomes irrational, leveraging its diversified market participation for resilience. Regarding auto, he confirmed meaningful exposure reduction but did not provide specific figures, noting some market participants misjudge loss costs.

Tracy Benguigui inquired about the industry-wide phenomenon of excess capital, potential competitor behavior, and catalysts that could turn pricing around. She also followed up on auto growth, exposure reduction, and pricing.

Answer

Rob Berkley (President and CEO) stated W. R. Berkley focuses on its own value proposition and is prepared to shrink business if competitors become irrational, leveraging its broad offering for resilience. Regarding auto, he confirmed the company is meaningfully reducing exposure and taking rate, but specific details are not publicly disclosed, noting some market participants misjudge loss costs.

Tracy Benguigui with Wolfe Research asked about the Florida excess profits statute, specifically if Progressive anticipates paying another excess profits statute in 2027 for the 2024-2026 accident years, and if current credits would neutralize future obligations. She also inquired about homeowner policy growth in Florida and property exposure relative to risk appetite.

Answer

Tricia Griffith, President and CEO, stated that it's too early to predict future excess profit payments, as the accrual for the current three-year period is still being refined. She emphasized Progressive's intent to manage profitability to avoid similar situations. Regarding bundling, she noted minimal property growth in Florida, following past non-renewals of coastal properties, with current growth focused on new construction within target profit margins.

Tracy Benguigui asked about the potential for Progressive to incur another Florida excess profits statute payment in 2027 for the 2024-2026 accident years, and how current credits might neutralize future liabilities. She also inquired about homeowner policy growth in Florida and property exposure.

Answer

President and CEO Tricia Griffith stated that it's too early to determine future excess profit liabilities, as the accrual for the current three-year period will continue to be refined monthly, influenced by storm season and planned rate decreases. She affirmed the intent to manage profitability to avoid similar situations. Regarding property, Griffith noted minimal homeowner policy growth in Florida, following past non-renewals of coastal and DP3 properties, and indicated a conservative approach to growth in volatile states, focusing on new construction.

Tracy Benguiat posed a macro question, asking for an educated guess on how much reinsurance dedicated capital (out of approximately $800 billion) would need to exit the industry to achieve equilibrium, given that supply currently outweighs demand. She also asked how the trend of property business being underwritten, shared, and layered (rather than through facultative reinsurance) impacts RenaissanceRe's opportunity set and relative pricing.

Answer

President and CEO Kevin O'Donnell suggested that the market is relatively close to balance, indicated by the forecast 10% rate reduction, and doesn't believe a specific 'X billion dollars' needs to leave the market. He emphasized that it's more about the perception of risk and comfort level for deployment. EVP and Chief Underwriting Officer David Marra explained that the shared and layered business, particularly cat-exposed E&S, is seeing increased competition but is a minority portion of their book. He noted that favorable development from strong terms and conditions supports the book's performance.

Tracy Benguiat posed a macro question, asking for an educated guess on how much reinsurance dedicated capital (out of approximately $800 billion) would need to exit the industry to achieve equilibrium, given that supply currently outweighs demand. She also asked how the trend of property business being underwritten, shared, and layered (rather than through facultative reinsurance) impacts RenaissanceRe's opportunity set and relative pricing.

Answer

President and CEO Kevin O'Donnell suggested that the market is relatively close to balance, indicated by the forecast 10% rate reduction, and doesn't believe a specific 'X billion dollars' needs to leave the market. He emphasized that it's more about the perception of risk and comfort level for deployment. EVP and Chief Underwriting Officer David Marra explained that the shared and layered business, particularly cat-exposed E&S, is seeing increased competition but is a minority portion of their book. He noted that favorable development from strong terms and conditions supports the book's performance.

Tracy Benguigui asked about the importance of Arch Capital maintaining its AA- S&P rating, particularly concerning the associated requirement to hold AAA capital, and whether the company would consider reducing capital and reverting to an A+ rating. She also sought clarification on which specific casualty lines, beyond professional lines, Arch finds attractive for growth, such as GL, commercial auto, or excess liability.

Answer

CFO Francois Morin stated that while the AA- rating is not critical, it is an advantage, especially in Europe and for certain mortgage-related transactions (CRT/SRT). He clarified that the AAA capital level is not new for Arch, as they were already at that level, and their capital position remains very strong. CEO Nicolas Papadopoulo added that the rating has been helpful for MI, CRT, and SRT, where buyers are sensitive to ratings. Mr. Morin confirmed that the trade-off of holding incremental capital for a higher rating is constantly evaluated. Mr. Papadopoulo identified E&S casualty, including excess liability (excluding heavy auto focus), national accounts, and construction (with workers' comp and general liability components) as attractive growth areas.

Tracy Benguigui asked about the importance of Arch Capital maintaining its new S&P AA- rating, considering the associated AAA capital requirements, and whether the company would consider reducing capital to revert to an A+ rating. She also sought clarification on specific attractive casualty lines for growth, beyond professional lines, such as GL, commercial auto, and excess liability.

Answer

François Morin (EVP, CFO, and Treasurer) stated that while not critical, the AA- rating is an advantage, particularly in Europe and for MI/CRT/SRT transactions. He clarified that the AAA capital level was not new for Arch. Regarding capital reduction, he noted it's a constant trade-off but, given the current strong capital position and internal capital generation, Arch is in a good spot. Nicolas Papadopoulo (CEO) identified opportunities in E&S casualty, including excess liability, and franchise-sensitive businesses like national accounts and construction, which are casualty-led with heavy workers' comp and general liability components.

Tracy Benguigui asked about the drivers of favorable loss experience in bodily injury and vehicle coverages within Personal Auto. She also questioned if Travelers' excess capital position surpasses its stated buyback targets and if concurrent deployment of capital for technology and/or M&A is expected.

Answer

Michael Klein, EVP and President of Personal Insurance, attributed the favorable loss experience in Personal Auto to a combination of favorable frequency and continued moderation in severity across bodily injury and physical damage coverages. Dan Frey, EVP and CFO, reiterated Travelers' capital management philosophy: deploy excess capital for technology investments and M&A first, then return it to shareholders via dividends and buybacks, confirming no change to this long-standing approach.