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

Jul 24, 2019 • 08:30 am ET

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

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Q & A
Operator
Operator

[Operator Instructions] And we'll take our first question from Mike Phillips with Morgan Stanley. Please go ahead.

Analyst
Mike Phillips

Thank you. Good morning, everybody. First question on -- that I have on your comments of what's driving the rate activity and, I believe, you said something like it's income and reserve driven, not capital driven. So I guess, I wonder if you can expand upon -- that kind of implies there's going to be some timing of reserve issues and maybe what you've seen and why you mentioned reserve driven?

Executive
Evan G. Greenberg

Well, just simply, the rate has not kept pace with loss cost trend and that puts pressure on income and it puts pressure, ultimately, on reserves. You are either -- I think that it just imply, it says what it implies. The balance sheets over time have less redundancy in them and for some are adequate, for others -- and become negative for others.

And you have a loss cost environment that in many ways in the headlines is stable, but you have areas of casualty and catastrophes and other areas within the business where there is volatility and there is trend pressure.

And so my comments meant to imply all of that. What I was saying to you is income and balance sheet not capital driven, that there is a dearth of capital. There is plenty of capital around and -- but it is more disciplined at this moment and it comes to -- it's deployed when the rate and terms are more adequate.

Analyst
Mike Phillips

Okay, no, thank you. That's helpful. I guess, if I could turn specifically to North America commercial lines, where, I guess, depending on what you use for 2Q '18 with your comments from last year, the structure settlement term had some impact there. The core loss ratio deteriorated either by 70 bps or 170 bps depending on how you adjust for that.

Is that looks like kind of one of the highest core loss ratios for that segment in a while. We heard Trevor just talking about noncat weather. I'm not sure if any of that came into play here for that segment for you or what else drove the uptick? And maybe has your view of loss trends in that segment changed since last quarter?

Executive
Evan G. Greenberg

Yes. Let's look at North America commercial P&C, let's look at on a current accident year ex cat. Last year ran an 87.4% combined ratio. This year ran an 87.9% combined ratio. I mean, simply outstanding, world-class and in the 80s. So let's have that perspective. We wrote the same volume of LPTs this year that we did last year, and so no impact from that. It was simply rate and trend naturally, not noncat weather or any of that, just simply rate and trend, something I've been saying for many quarters. Thanks for the question.

Analyst
Mike Phillips

Thank you.

Executive
Evan G. Greenberg

You're welcome.

Operator
Operator

We'll take our next question from Elyse Greenspan with Wells Fargo. Please go ahead.

Analyst
Elyse Greenspan

Hi, good morning. My first question, Evan, is