Chubb Limited 2026 Q3 Earnings Call

You may begin. Thank you, and welcome to our September 30, 2026 third quarter earnings conference call.

Our report today will contain forward-looking statements, including statements relating to the company's performance, pricing and business mix, growth opportunities, and economic and market conditions, which are all subject to risks and uncertainties, and actual results may differ materially. See our recent SEC filings, earnings release, and financial supplement, which are all 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 I'd like to introduce our speakers. First, we have Evan Greenberg, Chairman and Chief Executive Officer, followed by Peter Enns, our Chief Financial Officer. Then we will take your questions.

Also with us to assist with your questions are several members of our management team. Now it is my pleasure to turn the call over to Evan.

Good morning. As you can see, we had a really strong quarter. Our sources and quality of earnings, starting with world-class underwriting margins, speak to Chubb's excellent competitive profile, including our geographic and business diversification, our growing invested asset, and an enduring culture of underwriting discipline, a hallmark of who we are. These distinguishing attributes have all contributed to a long record of sustainable and growing value creation. P&C underwriting, investment, and life income results led to core operating earnings of $2.98 billion, or a record $7.66 per share. That was down about 2% and up about 1% respectively due to exceptionally light CAT losses last year. From a more meaningful perspective, looking to the first nine months of the year, core operating income was $8.6 billion, up 21% from the prior year, and core operating EPS was $21.94, up 24.5% from last year.

Annualized core operating return on tangible equity was 21.6% for the quarter, and core operating ROE was 14.9%. For the quarter, P&C underwriting income of nearly $2.1 billion led to a combined ratio of 84.1. We had strong contributions from all of our businesses. Year to date, we have produced record underwriting income of $5.8 billion, up nearly 34%. Our global P&C ex-CAT combined ratio was a world-class 81.8%, essentially flat with the prior year and included a reduction in our loss ratio and our admin ratio, offset by an increase in acquisition ratio. This speaks to our increasing efficiencies and mix of business. On the investment side of our business, adjusted net investment income was a record $1.89 billion, supported by a materially improved fixed income investment environment and record cash flows. Fixed income-related exposure is 88% of our invested asset, and equity-related is 12%.

Our current and future operating income benefits from a rising interest rate environment, which we have expected for some time given growing fiscal deficits, inflation, and the public and private sector competition for money. We positioned ourselves with that in mind by maintaining a moderate duration and a conservative approach to credit quality. We are a buy and hold investor of a high-quality investment-grade portfolio. Rising rates produced a third quarter mark of $4.5 billion in net realized and unrealized losses. Given our duration and higher reinvestment rates, the mark will amortize away reasonably quickly. It is ephemeral. The third quarter fixed income portfolio yield was 5.2%, and our current new money rate averages 6.2% as of September 30. Excuse me. On the alternative asset side, as was publicly announced in the quarter, Strategic Holdings and our holding company partnership with KKR agreed to sell our investment in USI Insurance Services to Aon.

This is expected to result in a realized gain of $460 million on an investment of $740 million. Our invested asset stands at over $175 billion, up from $168 billion a year ago. Life income of $369 million this quarter was up about 11.5% from last year. Year to date, life income is just over $1 billion, up over 9% from a year earlier. Peter's going to have more to say about financial items. Now turning to underwriting, pricing, and growth. The substantial majority of our businesses are growing, with the balance flat or purposely shrinking due to inadequate pricing or terms. There's nothing new there. In the quarter, we again shed more property and financial lines exposure, which affected growth.

The most visible example, again, is in the U.S. North America Commercial middle and small commercial grew in the quarter, as did North America personal lines and agriculture. Overseas General had good growth across all major regions of consumer and commercial, particularly middle and small commercial. While North America E&S and major accounts shrank. This pattern of growth again speaks to the breadth of our business and our diversified sources of growth and opportunity globally. While total P&C premiums were up 1.9%, Overseas General grew 6.7%. North America personal lines was up 5.3%, and agriculture was up over 5%. Agriculture was a meaningful contributor to growth this quarter. North America Commercial was down 2.7%, impacted again by large account and E&S property and financial lines, where we non-renewed certain business and purchased additional reinsurance.

The adverse impact on growth was about 4.5 points. With that said, I fully expect North America Commercial growth to improve materially in future quarters. In terms of pricing, the market continues to grow more competitive in commercial P&C across the globe, in particular the U.S. and London. Beyond property, competitive market conditions are spreading to more casualty lines, where pricing in numerous areas is failing to keep pace with loss costs, which while steady, continue to well outpace general inflation. There is a lot of hungry and extremely naive capacity available. Our broad diversification, including a deep local presence in so many countries and lines of business, leave us relatively well positioned with many areas of opportunity. With that as a baseline, I am going to give you more color on the quarter by division and region.

In international P&C, a $17 billion business, our consumer-related businesses, both A&H and personal lines, were up 7.2%, and commercial was up 6.3%. Latin America grew 11.7%, Asia grew 7.5%, and Europe grew almost 7%. In our London wholesale business, which is about 10% of international P&C, premiums were up 13.5% for the quarter, benefiting in particular from our Gulf war marine-related activities. Turning back to North America, premiums in our $10 billion middle market and small commercial division grew about 1%, with P&C lines up 2.6% or 4%, adjusting for a smaller annual workers' comp-related premium adjustment than we had last year. Middle market financial lines was down 5.9%, or up about 1.8%, adjusted for exposure change from additional use of reinsurance and non-renewal of inadequately priced business.

In our $16 billion major accounts and specialty division, premiums declined 5%, and adjusting for property were up about 1%. Gross premium pricing in North America for commercial property was down 4.2%. Casualty was up 5.7%, and financial lines was up 2.1%. Going a step further, for the business we wrote, property pricing was down 11% in shared and layered major and specialty, and up a little over a half a percent in mid and small. On the consumer side of North America, our nearly $8.5 billion high net worth personal lines business, a clear market leader in that category, had another really good quarter, with premium growth of almost 5.5%. Our combined ratio was 60.3%, which speaks to the strength of our risk selection, underwriting, and sophistication in pricing, and of course, a lighter than average quarter for CATs.

In our international life insurance business, premiums and deposits rose over 15.5%. The vast majority of our life exposure, as you know, is in Asia, and the majority of growth is coming in North Asia, meaning China, Hong Kong, Korea, and Taiwan, though I would like to call out Thailand as well this quarter. Premiums in our North America Chubb Workplace Benefits business were up over 11.5%. Our international life division produced $277 million of pre-tax income in the quarter, up 7% from last year, with income up almost 11% year to date. In sum, our global diversification, our presence and capabilities globally, our large and growing invested asset, along with rising interest rates and our operating discipline, provide us with strong margins, continued growth opportunities, and sustainability of value creation.

We are a consistent compounder of wealth and an all-weather firm with many sources of opportunity on both the liability and asset side of the balance sheet, and we are patient. CATs and FX aside, as I look out over the medium term, I am confident in our ability to continue to outperform and to generate strong growth in operating earnings and EPS, and most important, double-digit growth in tangible book value. I am going to turn the call back over to Peter, and then we are going to come back and we are going to take your questions.