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    CB
    Earnings call· Jun 2025(Q2 FY25)

    Chubb Q2 FY25 earnings call CB

    Jul 23, 2025 Source

    Executive summary

    Chubb Q2 FY25 — Record Underwriting Income and EPS

    Chubb delivered a record quarter driven by strong underwriting, investment results, and broad-based premium growth across geographies and segments. While large account property and financial lines face competitive pressures, the company's diversified portfolio and disciplined underwriting position it for continued profitable growth, with management expressing confidence in sustained top and bottom-line expansion.

    Highlights

    5

    • Core operating EPS was a record $6.14, up 14% from a year ago.

    • Record underwriting income of $1.6 billion, up 15% from a year ago, leading to a combined ratio of 85.6%, more than 1 percentage point better than prior year.

    • Current accident year underwriting income, excluding CATs, was up almost 11.5%, supported by a combined ratio of 82.3%, nearly a full point improvement from prior year.

    • Adjusted net investment income was nearly $1.7 billion, up 8%.

    • Tangible book value per share was up 23.7% from a year ago and 8% from the previous quarter, with annualized core operating return on tangible equity at 21%.

    Concerns

    3

    • Large account property business (admitted and E&S) has grown quite competitive, with pricing down 2.5% overall and down 12% in large account.

    • Financial lines remain soft, with pricing down 1.2% in North America and over 6.5% in international retail.

    • Corporate runoff portfolio had adverse development of $70 million, mostly from molestation-related claims development.

    Guidance & targets

    4
    CategoryTargetConfidence
    Adjusted net investment income
    $1.72 billion to $1.74 billion
    medium materiality
    High
    Annual core operating effective tax rate
    19% to 19.5%
    medium materiality
    High
    Latin America growth
    double-digit growth
    medium materiality
    High
    Company growth, revenue and earnings
    continue
    high materiality
    High

    Segment performance

    16
    SegmentRevenueYoYQoQMargin
    Global P&C (ex-agriculture)
    Strong growth across both commercial and consumer lines globally.
    Growth (constant dollars): 6.4%Commercial growth: 4.2%Consumer growth: 11.9%
    		—5.8%——
    Life Insurance
    Significant premium growth and pretax income contribution, primarily driven by Asia.
    Pretax income growth: 10.5%
    		—17.5%—$305 million pretax income
    North America P&C (ex-agriculture)
    Broad-based growth with strong performance in personal insurance.
    Personal insurance growth: 9.1%Commercial growth: 4.1%P&C lines growth: 4.2%Financial lines growth: 3.6%
    		—5.3%——
    North America Commercial
    Good new business growth, with strong casualty pricing offsetting competitive property and soft financial lines.
    New business growth: 7% vs prior yearRenewal retention (policy count): 86%Overall P&C pricing (ex-financial lines & comp): 4.5%Overall P&C rates: 1.6%Overall P&C exposure change: 2.9%Property pricing: -2.5%Property rates: -7%Property exposure change: 4.9%Casualty pricing: 11.6%Casualty rates: 10.6%Casualty exposure: 0.9%Financial lines pricing: -1.2%Workers' comp primary pricing: flatWorkers' comp large account risk management pricing: >7.5%
    		—4.1%——
    North America Middle Market
    Excellent growth across P&C and financial lines, with disciplined property pricing.
    P&C growth: 10%Financial lines growth: 2%Property pricing: >8%
    		—8.4%——
    North America Small Commercial
    Strong premium growth with disciplined property pricing.
    Property pricing: >8%
    		—10%——
    North America Major Accounts and Specialty
    Growth heavily impacted by premium reductions in property, offset by E&S and other lines.
    Large account business growth: flatE&S business growth: 5.6%Large account property pricing (admitted and E&S): -12%
    		—1.5%——
    North America Personal Lines (High-Net-Worth)
    Outstanding quarter with strong premium and new business growth, with pricing ahead of loss costs.
    New business growth: >17%Homeowners pricing: 10.2%Homeowners loss costs: 8.9%
    		—>9%——
    International General Insurance
    Robust growth across commercial and consumer lines internationally.
    Growth (constant dollar): >10%Commercial lines growth: 7%Consumer growth: >15%
    		—8.5%——
    Asia (International General Insurance)
    Strong growth in the Asia region.
    Growth (constant dollar): >12.5%
    		————
    Europe (International General Insurance)
    Solid growth in the European region.
    Growth (constant dollar): >8%
    		————
    Latin America (International General Insurance)
    Very strong growth in the Latin America region.
    Growth (constant dollar): >17%
    		————
    London Wholesale
    Premiums grew in the London wholesale business.
    		—>7%——
    International Retail Commercial
    P&C pricing was modest, while financial lines pricing declined.
    P&C pricing: 0.5%Financial lines pricing: -6.5%
    		————
    International Life Insurance (Asia)
    Strong constant dollar premium growth in Asia's life insurance operations.
    Growth (constant dollar): 18%
    		————
    North America Combined Insurance Companies
    Significant premium growth for the combined insurance companies in North America.
    		—>17%——

    Operational metrics

    13
    Core operating EPS
    $6.14up 14% YoY
    Q2 FY25

    Record core operating EPS.

    Core operating income
    $2.5 billionup 13%
    Q2 FY25

    Record core operating income.

    Current accident year underwriting income ex-CATs
    up 11.5%
    Q2 FY25

    Growth in underwriting income excluding catastrophe losses.

    Adjusted net investment income
    $1.69 billionup 8%
    Q2 FY25

    Strong growth in investment income.

    Fixed income portfolio yield
    5.1%
    Q2 FY25

    Yield on the fixed income portfolio.

    Current new money rate
    5.4%
    Q2 FY25

    Average rate for new investments.

    Book value
    $69 billion
    Q2 FY25

    All-time high book value.

    Cash and invested assets
    $160 billion
    Q2 FY25

    All-time high cash and invested assets.

    Core operating ROE
    13.9%
    Q2 FY25

    Core operating return on equity for the quarter.

    Core effective tax rate
    19.1%
    Q2 FY25

    Effective tax rate for the quarter, within guided range.

    Tangible book value per share ex-AOCI growth
    4.5%up 15.3% YoY
    Q2 FY25

    Growth in tangible book value per share excluding Accumulated Other Comprehensive Income.

    Book value per share ex-AOCI growth
    3.4%up 10.3% YoY
    Q2 FY25

    Growth in book value per share excluding Accumulated Other Comprehensive Income.

    Litigation cost inflation
    7% to 9%
    ongoing

    Inflation rate for litigation costs, impacting the economy broadly.

    Industry KPIs

    11
    MetricValueDetails
    Combined ratio85.6%%
    Capital returns$1.1 billionUSD
    ROE operating ROE21%%
    Catastrophe losses$630 millionUSD
    Book value per share8%%
    Net investment income$1.69 billionUSD
    Retention persistency86%%
    Life specific when present$305 millionUSD
    Net premiums written earned5.8%%
    Renewal rate change pricing4.5%%
    Prior year reserve development$319 millionUSD

    Deals & partnerships

    1
    Liberty MutualAcquisition of Liberty Mutual's P&C business in Thailand.

    The acquisition of Liberty Mutual's P&C business in Thailand was closed this quarter.

    Risks & headwinds

    5
    Competitive large account property marketQ2 FY25

    Pricing down 2.5% overall, with rates down 7%; large account property pricing down 12% (admitted and E&S).

    Mitigation: Disciplined underwriting, walking away from business below an adequate price.

    Soft financial lines marketQ2 FY25

    Pricing down 1.2% in North America and over 6.5% in international retail.

    Mitigation: Seeing signs of firming in discrete classes; continued discipline.

    Adverse prior period development in corporate runoff portfolioQ2 FY25

    $70 million adverse development, mostly from molestation-related claims.

    Mitigation: Not explicitly stated, but implies ongoing management of runoff liabilities.

    Economic and geopolitical uncertaintyongoing

    Budget deficits, trade and immigration policies, and a weaker dollar are potential headwinds.

    Mitigation: Chubb's strong fundamentals, broad-based global diversification, and disciplined culture.

    Litigation cost inflationongoing

    Runs at 7% to 9% annually; total cost is roughly 2.5% of GDP.

    Mitigation: Disciplined underwriting, adjusting terms and conditions, pricing to reflect hostile liability environment, and advocating for tort reform.

    What to watch in Q3 FY25

    5

    Adjusted Net Investment Income

    Q3 FY25
    Current$1.69 billion (Q2 FY25)
    Target$1.72 billion to $1.74 billion

    Why it matters

    This indicates continued growth in investment income, a key driver of profitability, and validates the impact of recent cash flows into the portfolio.

    Adjusted net investment income was $1.69 billion, and we now expect adjusted net investment income to be approximately $1.72 billion to $1.74 billion next quarter.

    Q&A highlights

    8

    How are litigation challenges affecting casualty/general liability coverage and insurability, and what are the prospects for tort reform?

    Evan Greenberg clarified that the op-ed was about public policy, flagging litigation cost inflation (7-9% annually, 2.5% of GDP) as a national problem. He explained that the insurance industry intermediates money and has responded by tightening terms and conditions and increasing pricing to reflect the hostile liability environment, shifting more risk to clients. He noted that an equilibrium is being achieved.

    “The two of us wrote that article, op-ed. That was about public policy. And that was to flag an issue that people should be focused on for our country that is a problem. It impacts the cost of everything. It's inflationary. It impacts innovation and growth of business and continuity of businesses, litigation and the movement of cost inflation around it, which runs at 7% to 9% every year, which is a multiple of what the nation runs as inflation, is roughly -- the total cost is roughly 2.5% of GDP and only a fraction of the $550 billion goes to the actual aggrieved party.”

    asked by Gregory Peters · answered by Evan G. Greenberg

    2 min read6 chapters

    Detailed Narrative

    01

    Underwriting Performance

    Chubb achieved record underwriting income of $1.6 billion, a 15% increase year-over-year, resulting in a combined ratio of 85.6%, which was 1 percentage point better than the prior year. The current accident year underwriting income, excluding CATs, also saw a significant improvement, up almost 11.5%, with a combined ratio of 82.3%, nearly a full point better than the prior year, reflecting strong underwriting discipline and premium growth.

    02

    Investment Income & Portfolio Strength

    Adjusted net investment income reached nearly $1.7 billion, an 8% increase, driven by a fixed income portfolio yield of 5.1% and a current new money rate averaging 5.4%. The company generated strong operating cash flow of $3.2 billion, which supported the growth of its A-rated investment portfolio by over $6 billion this quarter, contributing to record cash and invested assets of $160 billion.

    03

    North America P&C Dynamics

    North America P&C premiums, excluding agriculture, grew 5.3%, with personal insurance up 9.1% and commercial up 4.1%. While large account property (admitted and E&S) experienced competitive pricing pressures, with rates down 7% and overall pricing down 2.5%, the middle market and small commercial segments remained disciplined, showing property pricing up over 8%. Casualty pricing in North America was robust, up 11.6%, with rates up 10.6%.

    04

    International Growth and Diversification

    International general insurance operations saw premiums increase by 8.5% (over 10% in constant dollars), with commercial lines growing 7% and consumer lines over 15%. Regionally, Asia grew over 12.5%, Europe over 8%, and Latin America over 17% (all in constant dollars). The international life insurance business, primarily in Asia, also contributed significantly with premiums up 18% in constant dollars and $305 million in pretax income.

    05

    Capital Management and Shareholder Returns

    The Board authorized a new $5 billion share repurchase program effective July 1, with no expiration date. In the quarter, Chubb returned $1.1 billion of capital to shareholders, comprising $388 million in dividends and $676 million in share repurchases. Book and tangible book value per share grew 6.1% and 8% respectively for the quarter, demonstrating strong wealth creation.

    06

    Litigation Environment and Public Policy

    Management highlighted the broader public policy issue of litigation cost inflation, which runs at 7% to 9% annually and represents approximately 2.5% of GDP. This trend impacts the cost of goods and services, innovation, and business continuity. The company emphasized its role in intermediating risk and adapting underwriting and pricing strategies to reflect the increasingly hostile liability environment, noting that the impact varies significantly by state due to differing liability laws.

    AI-generated summary of the company’s earnings call. Not investment advice.