Chubb Limited (NYSE:CB) Q2 2019 Earnings Conference Call Transcript

Good day, and welcome to the Chubb Limited Second Quarter 2019 Earnings Conference Call. Today's call is being recorded. [Operator Instructions] For opening remarks and introductions, I would like to turn the call over to Karen Beyer, Senior Vice President Investor Relations. Please go ahead, ma'am.

Thank you, and good morning, everyone. Welcome to Chubb's June 30, 2019, Second Quarter Earnings Conference Call. Our report today will contain forward-looking statements, including statements relating to company performance and growth opportunities, pricing and business mix and economic and market conditions, which are subject to risks and uncertainties, and actual results may differ materially.

See our recent SEC filings, earnings release and financial supplement, which are available on our website at investors.chubb.com for more information on factors that could affect these matters. We will also refer today to non-GAAP financial measures, reconciliations of which to the most direct comparable GAAP measures and related details are provided in our earnings press release and financial supplement. Now it's my pleasure to introduce our speakers this morning.

First, we have Evan Greenberg, Chairman and Chief Executive Officer; followed by Phil Bancroft, our Chief Financial Officer. We'll then take your questions. Also with us to assist with your questions are several members of our management team.

And now I'll turn the call over to Evan.

Good morning. As you saw from the numbers, we had a very good second quarter, highlighted by excellent underwriting and strong premium revenue growth globally in constant dollars that is benefiting from favorable underwriting conditions and our various growth initiatives. In fact, the positive pricing and underwriting environment continued to improve through the quarter and spread to more classes and segments of business.

Core operating income was $1.2 billion or $2.60 per share, down 3% due to modestly higher year-on-year cat losses. Book and tangible book value per share were up 3.2% and 4.7%, respectively, in the quarter and are now up 7.7% and nearly 12% for the year, combination of income and the mark derived from falling interest rates.

Our combined ratio of 90.1% included 3.8 points of cat losses and 2.6 points of favorable prior period reserve development, though on a current accident at year basis, excluding cat, the combined ratio was 88.9%. Phil will have more to say about investment income, book value, cat and prior period development.

Turning to growth. P&C premium revenue in the quarter in constant dollars was quite strong. Net premiums written grew 6% with foreign exchange having a negative impact of 1.8 percentage points. The pricing environment continued to firm through the quarter, and we took advantage of some of the best pricing we've seen in years. The rate of increase of prices accelerated, while at the same time it's spread to more classes of business and more classes of risk. Rates continued to firm in the U.S. for major accounts and E&S specialty to the middle market.

We continued to observe favorable conditions in London wholesale market and in Australia, with early signs firming