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Chubb Ltd Earnings - Analysis & Highlights for Q4 2024
Overview
PositivesNegatives
- Global P&C premiums increased by 6.7% in Q4, with commercial up by 6.4% and consumer up by 7.5%.
- Pricing for property and casualty, excluding financial lines and comp, was up 9.9%, with rates up 8.2% and exposure change of 1.6%.
- P&C underwriting income of $5.9 billion was up over 7%, with a published combined ratio of 86.6%.
- Premiums were down from the prior year due to lower commodity prices and the formulas for risk sharing with the government.
- Financial lines pricing was down 3.3%, with rates down 3.6%.
- The competition is increasing in shared and large account business.
- California is a difficult market for insurance companies and it has only become more difficult over time.
- The company expects to amortize unrealized mark-to-market losses on its high-quality fixed income portfolio due to interest rate changes and foreign exchange losses.
Q&A Highlights from Chubb Ltd Earnings Call Q4 2024
- Analyst asked about the company's growth prospects and the possibility of inorganic growth opportunities in 2025.
- The company does not provide guidance on future growth, but organic growth is expected to be in the mid-to-high single digits for commercial lines. The company is always looking for inorganic growth opportunities, but they are opportunistic and must be the right thing at the right price.
- The company does not provide guidance on future growth, but organic growth is expected to be in the mid-to-high single digits for commercial lines. The company is always looking for inorganic growth opportunities, but they are opportunistic and must be the right thing at the right price.
- Analyst asked about the impact of structured transactions on the loss ratio in the quarter.
- The company clarified that the question was about the impact of structured transactions on the loss ratio in the quarter.
- The company clarified that the question was about the impact of structured transactions on the loss ratio in the quarter.
- Analyst asked about the growth of life insurance and how it compares to the growth in 2024.
- The life insurance business had a lot of consolidation impact in 2023 and some noise in 2024. However, when looking at the underlying growth rate, it produced a double-digit growth rate in income, around 12% to 14%. The company sees this growth continuing and even strengthening in the coming year, with good momentum in Asia, particularly in North Asia and Southeast Asia. The business in Korea is growing, despite slower revenue growth, and the margin of the business is expanding. The company also has good momentum in Hong Kong, Taiwan, and China, which are growing more quickly. Southeast Asia, with Vietnam and Thailand, had slower growth in 2023 but is accelerating as the company moves forward. Additionally, the company has two other businesses in Indonesia and New Zealand that are picking up momentum, particularly in direct response marketing and agency. The company has two themes in Asia, an aging population in the north that requires a certain kind of savings and health-related product, and a younger population in Southeast Asia with a family-oriented culture and no social safety nets. The economic growth in these parts of Asia is multiples of what is seen in the West, which means a rising middle class.
- The life insurance business had a lot of consolidation impact in 2023 and some noise in 2024. However, when looking at the underlying growth rate, it produced a double-digit growth rate in income, around 12% to 14%. The company sees this growth continuing and even strengthening in the coming year, with good momentum in Asia, particularly in North Asia and Southeast Asia. The business in Korea is growing, despite slower revenue growth, and the margin of the business is expanding. The company also has good momentum in Hong Kong, Taiwan, and China, which are growing more quickly. Southeast Asia, with Vietnam and Thailand, had slower growth in 2023 but is accelerating as the company moves forward. Additionally, the company has two other businesses in Indonesia and New Zealand that are picking up momentum, particularly in direct response marketing and agency. The company has two themes in Asia, an aging population in the north that requires a certain kind of savings and health-related product, and a younger population in Southeast Asia with a family-oriented culture and no social safety nets. The economic growth in these parts of Asia is multiples of what is seen in the West, which means a rising middle class.
- Analyst asked about Chubb's competitive advantages and whether the company has aspirations to do inorganic things in the small mid-market space in the US.
- Chubb's focus is on organic growth in the SME, small, and middle market segments. The company is not focused on inorganic growth and any inorganic activity is opportunistic.
- Chubb's focus is on organic growth in the SME, small, and middle market segments. The company is not focused on inorganic growth and any inorganic activity is opportunistic.
- Analyst asked about the continued decline in premiums in financial lines, particularly in public D&O, and why players continue to pursue it despite the negative trend.
- Management stated that they love the business, but the pricing is the issue. They are concerned about the pricing and are not pursuing it as aggressively as they once did.
- Management stated that they love the business, but the pricing is the issue. They are concerned about the pricing and are not pursuing it as aggressively as they once did.
- Analyst asked about the impact of the events in California on property pricing more broadly.
- Management stated that it is too early to tell, and the ultimate size of the loss will determine whether it has a broader impact on overall property pricing. They emphasized the importance of maintaining pricing adequacy in the industry.
- Management stated that it is too early to tell, and the ultimate size of the loss will determine whether it has a broader impact on overall property pricing. They emphasized the importance of maintaining pricing adequacy in the industry.
- Analyst asked about the possibility of a change in the DTA structure, which was set up a year ago.
- From an accounting perspective, the DTA structure is based on Bermuda law, which is not expected to change. However, the OECD's administrative guidance needs to be reviewed to see how it applies. Additionally, the new administration has come out with a statement that they will not participate in the global minimum tax of the OECD. Therefore, the company has a clear sense of where they are for 2025 and 2026, but it is uncertain in the long term, particularly with the new administration and some other large countries not being involved.
- From an accounting perspective, the DTA structure is based on Bermuda law, which is not expected to change. However, the OECD's administrative guidance needs to be reviewed to see how it applies. Additionally, the new administration has come out with a statement that they will not participate in the global minimum tax of the OECD. Therefore, the company has a clear sense of where they are for 2025 and 2026, but it is uncertain in the long term, particularly with the new administration and some other large countries not being involved.
- Analyst asked about competition in financial lines.
- Evan G. Greenberg stated that as lawsuits emerge and renormalize, it will be an ameliorating factor.
- Evan G. Greenberg stated that as lawsuits emerge and renormalize, it will be an ameliorating factor.
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