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    Chubb Ltd (CB)

    Business Description

    Chubb Limited is a global insurance and reinsurance organization that operates through six business segments, providing a wide range of insurance products and services . The company offers property and casualty (P&C) insurance, accident and health (A&H) insurance, crop insurance, and life insurance, among other products . Chubb emphasizes product and geographic diversification, contributing to its stability in the face of industry volatility .

    1. North America Commercial P&C Insurance - Provides property and casualty (P&C) and accident and health (A&H) insurance to large, middle market, and small commercial businesses in the U.S., Canada, and Bermuda .
    2. Overseas General Insurance - Offers commercial and consumer P&C insurance in 51 countries outside North America .
    3. North America Personal P&C Insurance - Focuses on high net worth personal lines, offering products like homeowners and automobile insurance .
    4. Global Reinsurance - Provides reinsurance solutions to various clients .
    5. Life Insurance - Includes life and asset management businesses, with significant contributions from the Huatai Group acquisition .
    6. North America Agricultural Insurance - Provides crop insurance and other agricultural coverages .

    Q3 2024 Summary

    Initial Price$256.93July 1, 2024
    Final Price$292.12October 1, 2024
    Price Change$35.19
    % Change+13.70%

    What went well

    • Chubb's North America commercial business reports strong margins, with pricing remaining strong, enabling the company to grow above trend over time .
    • Chubb's invested asset base continues to grow, serving as a source of income and superior returns . The company is focused on capital and asset management to enhance returns .
    • Chubb sees robust international growth, with Asia Pacific growing in the 9% range, Europe growing 8.5%, and Latin America growing 7.5%. The company feels confident about its international growth capabilities .

    What went wrong

    • Financial lines premium decreased by 6.2%, and the company did not provide a breakdown of critical segments like D&O insurance, raising concerns about profitability in these areas.
    • Reserve strengthening of $59 million on long-tail reserves, especially in excess casualty, suggests potential underwriting challenges, as the company declined to provide detailed explanations.
    • Analysts questioned the growth in the asset base due to lower paid claims relative to incurred, implying an elongation of the claims cycle in casualty lines, which the company did not fully address.

    Q&A Summary

    1. Casualty Reserve Charge
      Q: What's behind the $59 million adverse development in casualty reserves?
      A: The $59 million reserve charge in North America casualty relates to accident years 2019 to 2022, primarily in excess casualty ( , ). There were both positive and negative developments in long-tail classes, but excess casualty produced negative results. Overall, the charge was modest relative to the total premiums written ( , ).

    2. North America Commercial Growth
      Q: Should we expect accelerated growth in North America commercial ex financial lines and workers' comp?
      A: While not providing specific guidance, Chubb is confident in its ability to continue to grow above trend over time in North America commercial lines, excluding financial lines and workers' comp ( ). The company emphasizes risk selection, structure, and pricing in a healthy market where "all underwriters aren't created equal" ( ).

    3. London Market Competition
      Q: Is increased competition in London affecting the international business growth outlook?
      A: The London wholesale market constitutes about 10% of Chubb's international business ( , ). While there is traditional competitive behavior in London that could impact rates, the majority (90%) of international growth is driven by regions like Europe (grew 8.5%), Latin America (7.5%), and Asia (grew in the 9% range) ( ). Chubb feels good about its international growth capabilities despite the competitive dynamics in London ( , ).

    4. Property Lines and Catastrophe Losses
      Q: Given recent hurricane activity and cat losses, what's the outlook for property lines and renewals?
      A: In the primary market, especially middle-market and small commercial, pricing remains firm and continues to rise due to hurricane and severe convective storm activity ( , ). In shared and layered property business, there is rate pressure with rates coming down but remaining at good levels due to increased competition, particularly from London ( ). Chubb is comfortable leaning into property and catastrophe risks, leveraging its underwriting expertise and capital flexibility ( ).

    5. Capital Management Strategy
      Q: Any change in views on capital management, specifically regarding share repurchases and dividends?
      A: No changes are planned; Chubb will maintain a steady approach to capital management, returning a healthy amount of capital to shareholders while investing in opportunities that offer risk-adjusted returns well above the cost of capital ( ).

    6. Life Insurance Income Growth
      Q: Why isn't life insurance top-line growth translating into more income growth?
      A: The top-line growth in total life and international life was around 10%, with income growth in international life at over 9%, so they're tracking closely ( ). The combined insurance business had an oversized nonrecurring item in the prior year; adjusting for that, growth rates are consistent across life operations ( ).

    7. D&O Profitability and Outlook
      Q: Can you still make money in D&O given the premium decline in financial lines?
      A: Chubb continues to write D&O where it can make money ( ). The company has a large installed customer base and a strong reputation in D&O and financial lines. While not providing a breakdown, they emphasize not writing business that isn't profitable ( ).

    8. Underwriting Profitability Concerns
      Q: Could increased global competition erode your excellent combined ratios?
      A: Chubb focuses on published combined ratios as the most important indicator, rather than ex-catastrophe figures ( ). The industry is delivering decent returns, but there's not much room to move on pricing adequacy. Loss trends are relentless, so maintaining rates is essential to preserve profitability ( , ).

    9. Casualty Pricing Dynamics
      Q: What's your view on price adequacy in casualty lines and the need to keep pushing rates?
      A: Price adequacy in casualty varies by area, customer, and geography; there's no general statement ( ). It's always an underwriter's market, requiring data, experience, analytics, and actuarial support to make pricing decisions ( ).

    10. Growth in Asset Base and Investment Income
      Q: How should we think about the growth in the asset base and its impact on investment income?
      A: Chubb's invested asset base continues to grow due to business growth and healthy margins ( ). This growth is intentional, providing a source of income and superior risk-adjusted returns well above the cost of capital. The company will continue to focus on returns within the portfolio as a prudent asset allocator ( ).

    11. Investment Income Guidance
      Q: Can you provide guidance on investment income for the next quarter?
      A: For the fourth quarter, Chubb expects to be at the high end of its previous guidance on a recurring basis ( ). While some items like private equity returns are harder to predict, the recurring investment income remains strong ( ).

    12. Tax Rate Outlook
      Q: Will Bermuda tax changes lead to a higher tax rate next year?
      A: Chubb typically provides full-year guidance in the fourth quarter and did not offer specifics regarding the tax rate due to uncertainty ( ).

    Key Metrics

    View all financials →
    Revenue by Segment - in Millions of USDFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    North America Commercial P&C Insurance4,3694,2484,7355,06418,4164,8804,9004,735
    - Net Premiums Written1,293-1,452-5,4651,633-1,452
    North America Personal P&C Insurance1,3201,2711,4071,5385,5361,4711,5121,407
    North America Agricultural Insurance1595731,5408973,1691286351,540
    Overseas General Insurance2,7862,6963,3113,43812,2313,1982,9083,311
    Global Reinsurance244222239257962295339239
    Life Insurance1,2645391,4422,1535,3981,6111,2561,442
    Corporate00--0---
    Property and Other Short-Tail Lines-2,346-----2,314
    Commercial Casualty-2,024-----2,548
    Financial Lines-1,244-----1,249
    Workers' Compensation-537-----539
    Commercial Multiple Peril-391-----433
    Surety-174-----188
    Total Commercial P&C Lines-------7,271
    Agriculture-767-----1,379
    Personal Homeowners-1,174-----1,287
    Personal Automobile-460-----624
    Personal Other-485-----509
    Total Personal Lines-------2,420
    Global A&H - P&C-786-----855
    Reinsurance Lines-293-----352
    Total Property and Casualty Lines-------12,277
    Net Investment Income----4,9371,391--
    Total Revenue11,0579,54912,67417,36950,64912,89412,29214,849
    Revenue by Geography - in Millions of USDFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    Europe, Middle East, and Africa1,7211,3071,2647365,0281,8691,4091,347
    Asia7337721,0995,6248,2281,1611,1771,279
    Latin America6616136957742,743777697701
    Other435151--285140
    North America----29,713---
    - Japan105142102-----
    Total Revenue11,0572,8853,21128,55945,7123,8353,3343,367
    KPIs - Metric / QuarterFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    **Net premiums written** ($ million)10,71011,95113,10411,596-12,22113,36013,829
    **Net premiums earned** ($ million)10,10010,99912,70011,897-11,58312,30013,400
    **Catastrophe losses** ($ million, pre-tax)458400670300-435580765
    **Combined ratio** (%)86.385.488.485.5-86.086.887.7
    **CAY combined ratio excluding catastrophe losses** (%)83.483.384.380.4-83.783.283.4
    **Net amount at risk** ($ million)2,2962,0482,1381,872-1,6831,6301,595
    **Cash Surrender Value** ($ million)5,1245,3695,2515,346-5,6555,6255,790
    **Weighted-average crediting rate** (%)3.63.83.83.0-2.92.82.7
    **Guaranteed minimum crediting rates** ($ million)1,4321,4142,3831,314-563546464
    **Weighted average duration** (years)13.516.418.74.8-19.319.14.7

    Executive Team

    NamePositionStart DateShort Bio
    Evan G. GreenbergChairman, Chief Executive Officer, and DirectorAugust 2002Evan G. Greenberg has been a director of Chubb Limited since August 2002. He was elected Chairman in May 2007 and appointed President and CEO in May 2004. Previously, he held senior positions at AIG .
    Timothy A. BoroughsExecutive Vice President and Chief Investment Officer2000Timothy A. Boroughs was appointed as the Chief Investment Officer of Chubb Group in 2000 and became an Executive Vice President in 2014. He previously worked at Tudor Investment Corporation and Fischer Francis Trees & Watts .
    Peter C. EnnsExecutive Vice President and Chief Financial OfficerJuly 2021Peter C. Enns was appointed as Executive Vice President and Chief Financial Officer in July 2021. He joined Chubb in April 2021 and has over 30 years of experience in finance and investment banking .
    Bryce L. JohnsSenior Vice President; President, Chubb LifeApril 2022Bryce L. Johns was appointed as Senior Vice President, Chubb Group and President, Chubb Life in April 2022. He has over 25 years of experience in insurance and previously worked at HSBC, Citigroup, Manulife Asia, and Old Mutual .
    John W. KeoghPresident and Chief Operating OfficerDecember 2020John W. Keogh was appointed President of Chubb in December 2020 and has served as Chief Operating Officer since July 2011. He joined Chubb in 2006 and previously worked at AIG .
    John J. LupicaVice Chairman; President, North America InsuranceSeptember 2020John J. Lupica was appointed as Vice Chairman of Chubb in November 2013 and as President, North America Insurance in September 2020. He joined Chubb in 2000 and held various senior management positions .
    Frances D. O'BrienExecutive Vice President; Chief Risk OfficerApril 2023Frances D. O'Brien was appointed as Executive Vice President, Chubb Group and Chief Risk Officer of Chubb Limited in April 2023. She has over 40 years of experience in the insurance industry .
    Juan Luis OrtegaExecutive Vice President; President, Overseas General InsuranceAugust 2019Juan Luis Ortega was appointed as Executive Vice President, Chubb Group and President, Overseas General Insurance in August 2019. He joined Chubb in 1999 and held various senior roles .
    Joseph F. WaylandExecutive Vice President and General CounselJanuary 2016Joseph F. Wayland was appointed as Executive Vice President of Chubb Limited in January 2016 and has served as General Counsel and Secretary since July 2013. He previously worked at Simpson Thacher & Bartlett LLP .
    George OhsiekVice President, Chubb Group and Chief Accounting OfficerSeptember 4, 2024George Ohsiek serves as Vice President, Chubb Group and Chief Accounting Officer at Chubb Limited, effective September 4, 2024. He joined Chubb in 2008 and has over 25 years of accounting experience .
    Annmarie HaganChief Financial Officer of Operations & Technology and TransformationSeptember 4, 2024Annmarie Hagan has been named the Chief Financial Officer of Operations & Technology and Transformation at Chubb Limited, effective September 4, 2024. She previously served as Chief Accounting Officer since May 2020 .
    Mong-Diep "Dee" LeChief AuditorSeptember 4, 2024Mong-Diep "Dee" Le serves as the Chief Auditor at Chubb Limited, effective September 4, 2024. She was previously the Executive Vice President, Global Controller for Chubb .
    Scott MeyerChief Operating Officer, North America InsuranceN/AScott Meyer has nearly 35 years of insurance industry experience. He joined Chubb’s North America Insurance business in 2008 and was appointed Division President of Westchester in 2020 .

    Questions to Ask Management

    1. Can you provide more detail on the $59 million of unfavorable development in long-tail lines, particularly in general casualty, and explain how you plan to address this issue?

    2. With premiums in financial lines down 6.2% and low single-digit rate decreases, can you elaborate on the profitability of your D&O business and the outlook for this segment?

    3. Given the increased competition and rate pressure in the shared and layered property market, especially due to what you describe as "aberrant" behavior in the London market, how do you anticipate this will impact your underwriting margins and what strategies are you implementing to maintain profitability?

    4. Despite strong cash flows and record capital levels, you stated a "steady as she goes" approach to capital management; can you discuss why there is no change in your view on share repurchases versus special dividends, particularly with the appreciating stock price?

    5. You expressed confidence in your ability to continue growing above trend without providing forward guidance; given the rate pressures in some lines and potential economic headwinds, what underpins this confidence in sustaining above-trend growth?

    Share Repurchase Program

    Program DetailsProgram 1Program 2
    Approval DateMay 19, 2022 July 1, 2023
    End Date/DurationJune 30, 2023 No expiration date
    Total additional amount$2.5 billion $5.0 billion
    Remaining authorization$0 (allocated to Program 2)$2.4 billion
    DetailsN/AOffset dilution from stock options

    Past Guidance

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: Q4 2024
    • Guidance:
      • Core Effective Tax Rate: Expected to be between 19% and 19.25% for Q4 2024, with the full year between 18% and 18.25% .
      • Investment Income: Expected to be at the high end of the guidance range provided for the last six months on a recurring basis .
      • Life Insurance Income: On pace to exceed the life division income target of $1 billion for the year .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: Remainder of FY 2024
    • Guidance:
      • Adjusted Net Investment Income: Expected to average approximately $1.57 billion to $1.63 billion for the remainder of the year .
      • Core Effective Tax Rate: Expected to be within 18.75% to 19.25% for the remainder of the year .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: Q1 2024
    • Guidance: No specific guidance metrics were provided. The CEO stated they do not guide growth for the year, and the CFO mentioned it was too early to provide guidance on the tax rate for the next year .

    Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: FY 2024
    • Guidance:
      • Tax Rate: Expected annual core operating effective tax rate for calendar 2024 to be in the range of 18.75% to 19.25% .
      • Operating Earnings Growth: Expected to continue growing at a double-digit pace through P&C revenue growth, underwriting margins, investment income, and life income .