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

Jul 24, 2019 • 08:30 am ET


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


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Evan G. Greenberg

conditions are spreading to the U.K. company market and to certain classes of risk on the continent of Europe and in Southeast Asia. Overall, where rates are moving, they are firming broadly to varying degrees in most all short- and long-tail classes.

Accompanying price increases, terms and conditions are tightening in certain classes. In my judgment, given some of the market dislocation we have observed, including a reset of risk appetite on the part of some, this firming trend is sustainable and will likely continue to accelerate and spread. It is income and loss reserve driven, not capital driven.

Overall prices increased in North America commercial on a written basis by about 7% in the quarter versus a loss cost trend in aggregate of just under 4.5%. Renewal price change includes both rate and exposure. Rate was up 6.3% and exposure 0.5 point. Pricing improved throughout the quarter in many property and casualty-related areas, including general casualty, both primary and excess, D&O and professional lines.

As more business comes into our underwriting appetite and price range and other carriers take corrective actions, we are benefiting from a flight to quality. All things being equal, many buyers prefer Chubb. New business in our North America commercial lines was up over 11% in the quarter with major accounts in specialty up nearly 15%.

Retention of our customers remained strong across all of our North America commercial and personal P&C businesses with renewal retention as measured by premium of 93.5%. In major accounts and specialty commercial, excluding agriculture, premiums were up 7%, with major up 5.5% and Westchester E&S up over 9%.

Renewal price change for major accounts was 8.5% with risk management pricing up 6.3%, excess casualty up almost 10% and property up 18.5%. Public D&O rates increased 11%. In our Westchester business, renewal pricing was up over 9.5%.

Turning to our middle market and small commercial business. Premiums overall were up over 4.5%. Renewal retention in our middle market business was 92%. Middle market pricing was up over 4.5%. And if you exclude workers comp, it was up nearly 5%. Again, this is the best we've seen in a number of years.

Middle market pricing for primary casualty was up 4.5%, property 6.5%, excess umbrella up over 6% and public D&O rates were up 18%. In our North America Personal Lines business, net premiums in the quarter were down 2%. But adjusting for the expanded reinsurance that we have discussed in the past and an accounting change that impacted growth prior year, net premiums written were up about 2.5%.

Retention remained strong at 96%. And for homeowners, pricing was up nearly 10% in the quarter.

Turning to our international business, growth accelerated in our overseas general insurance operation with net written premiums in constant dollars up 9%. FX then had a negative impact of almost 6 points. Net premiums for our London market wholesale business were up over 24%, while our retail division was up 7.5% with growth led by Latin