Q2 2024 Earnings Summary
- Chubb achieved a record $1.3 billion in new business and maintained a 90% renewal retention rate, reflecting strong growth and customer loyalty. ,
- The company's North America Personal Lines grew at a healthy double-digit rate, driven by broad-based growth across geographies and enhanced pricing sophistication, catering to high-net-worth customers.
- Chubb's global Accident & Health business is experiencing strong double-digit growth, particularly in the Asia Pacific region, where it operates a $4.5 billion portfolio and leverages over 200 digital platforms, demonstrating successful international expansion and digital integration.
- Chubb faced $116 million in reserve charges for auto liability due to adverse development, indicating challenges in this line of business.
- The company's financial lines premiums decreased, with financial lines down 3% in North America Commercial and down 2.5% in its major accounts and specialty division, suggesting competitive pressures impacting growth.
- Uncertainty regarding social inflation and loss cost trends raises concerns about whether Chubb needs to adjust loss picks or add reserves, which may affect future profitability.
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Loss Cost Trends
Q: Did loss cost trends change this quarter?
A: Management stated there was no change in loss cost trends. P&C lines excluding financial lines and comp had a loss cost of 7.3%, consistent with expectations. -
Casualty Growth and Pricing Strategy
Q: Why isn't casualty line growth higher?
A: Management explained that casualty lines are growing in areas where they can earn an underwriting profit. They mentioned restructuring in large account auto liability, which reduced premiums by about $50 million in the quarter. -
Reserves and Social Inflation
Q: Are you adding IBNR due to social inflation?
A: Management stated they have already raised loss picks and loss cost trends over the last few years, and they have not adjusted loss picks this year as trends remain steady with their expectations. -
Strong Growth in Personal Lines
Q: What's driving 42% growth in personal auto?
A: Management clarified they did not grow North America Personal Lines by 42%, but they are seeing double-digit growth. This growth is driven by improved pricing, sophisticated by-peril pricing, enhanced services, and increased demand for Chubb's offerings. -
Global Opportunities in Accident and Health
Q: Where are global growth opportunities?
A: Management highlighted strong growth in Accident & Health and Personal Lines globally. In North America, worksite voluntary benefits grew double digits. In Asia Pacific, they see growth in direct marketing and digital distribution. Digital consumer lines are growing at a healthy double-digit rate through partnerships with over 200 digital platforms, and travel insurance in Asia is also performing well. -
Prior Period Development
Q: Details on the $144 million prior period development?
A: Management explained they studied large account workers' comp and auto liability. Workers' comp resulted in a reserve release of about $287 million, while auto liability had a charge of about $116 million. -
Management Changes and Promotions
Q: What's behind recent management changes?
A: Management stated the changes reflect their succession management process, planned over 18 months ago. The promotions align talent with the company's growth, strategic opportunities, and the need to address both day-to-day operations and larger structural issues. -
Agricultural Business Outlook
Q: How is the agricultural business shaping up?
A: Management noted growing conditions are very good, especially for corn and soybean, in areas where they have exposure. The base price is only off by 10%, which is within the average deductible, leading to a favorable outlook so far.