Chubb Limited Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Quarterly and Annual Performance: Outstanding quarter with core operating income of nearly $3 billion or $7.52 per share, up about 22% and 25% respectively. Full year had record operating income just shy of $10 billion or $24.79 per share, up about 9% and 11%. Total company net premiums grew almost 9% with P&C up 7.7% and life up about 17%.
• Underwriting Performance: P&C underwriting income was $2.2 billion, up 40% with a record low combined ratio of 81.2%. Agriculture division was #1 crop insurer in America with outstanding results. Excluding agriculture, global P&C current accident year combined ratio was 80.9%.
• Investment Performance: Record adjustment net investment income of $1.8 billion, up 7.3%. Fixed income portfolio yield 5.1%. Invested asset at $169 billion.
• Growth and Pricing: P&C premium revenue grew over 7.5% in the quarter. International P&C and U.S. agriculture had strong growth. Commercial P&C underwriting environment in transition, with casualty pricing firming in some areas.
• Capital Return: Returned $1.5 billion of capital to shareholders in the quarter, total $4.9 billion for the year including share repurchases and dividends. Book and tangible book value per share grew.

Segment Performance

• P&C: Total company net premiums grew almost 9%, with P&C up 7.7%. Q4 P&C underwriting income was $2.2 billion, up 40% with a record low combined ratio of 81.2%. Excluding agriculture, global P&C current accident year combined ratio was 80.9%. North America P&C premiums were up over 6.5%, with agriculture up over 45%, personal lines up over 6%, and commercial up 4.3%.
• Life: Total company net premiums grew about 17%. International life insurance premiums were up almost 18% in constant dollar. North America life premiums in Chubb worksite benefits were up over 16.5%. Life division produced $322 million of pretax income in the quarter, up just shy of 20%.
• Investments: Record adjustment net investment income of $1.8 billion, up 7.3%. Fixed income portfolio yield is 5.1%. Invested asset stands at $169 billion, up from $151 billion a year ago. Adjusted net investment income for 2025 grew 9% to $6.9 billion.

Guidance

• Investment Income: Expect adjusted net investment income in Q1 2026 to be between $1.81 billion to $1.84 billion.
• Tax Rate: Expect annual core operating effective tax rate for 2026 to be in the range of 19.5% to 20%.
• Future Outlook: Confident in generating strong growth in operating earnings and double-digit growth in EPS and tangible book value through P&C underwriting, investment income, and life, aside from cats and FX.

Risks

• Catastrophic Losses: Pretax catastrophe losses were $365 million for the quarter and $2.9 billion for the year. Cat exposure is volatile with factors like fire, flood, cyclonic, and earthquake contributing to industry losses.
• Foreign Exchange Volatility: Impact on revenue and income as assets and liabilities are matched in currency, but FX is not hedged for revenue/income.
• Competition: Commercial P&C underwriting environment growing incrementally more competitive, especially in large account property admitted in E&S and upper middle market.
• Economic and Geopolitical Factors: Impact on GDP growth and insurance opportunities, with concentrated GDP growth potentially more volatile.

Question and Answer

• Q: Brian Meredith on U.S. commercial lines margins sustainability in 2026 A: Evan G. Greenberg said he doesn't give forward guidance, but is comfortable with combined ratios and has confidence in underwriting income contributing to EPS growth.
• Q: Brian Meredith on personal lines and excess profit laws A: Evan G. Greenberg discussed affordability issues, separating insurance from money printing, liability cost increases, and the impact of politicizing affordability on availability.
• Q: Bob Huang on overseas business growth, Latin America and Asia A: Evan G. Greenberg talked about consumer business growth in Latin America through bank partnerships and digital distribution in Asia, emphasizing the need for local franchises and technology/data integration.
• Q: David Motemaden on overseas general insurance consumer lines margins A: Evan G. Greenberg mentioned A&H business's steady underwriting margin, but didn't break down margins by business. Discussed digital transformation impact on expenses and claims cost.
• Q: Greg Peters on foreign exchange and enterprise risk management A: Evan G. Greenberg explained no hedging of revenue/income, assets and liabilities matched in currency, and FX impact on growth and income.
• Q: Ryan Tunis on GDP growth and P&C growth opportunities A: Evan G. Greenberg stated broader-based GDP growth is more stable, and Chubb will take growth wherever it comes from as long as risk-adjusted return is adequate.
• Q: Matthew Heimermann on January 1 conditions A: Evan G. Greenberg said January 1 conditions for large account business were better than expected, indicating a good start.
• Q: Tracy Benguigui on asset allocation and AI cultural reception A: Peter Enns mentioned private equity allocation in life and Asian markets, and Evan G. Greenberg discussed cultural adaptability and support for digital transformation.
• Q: Andrew Kligerman on financial lines and workers' comp pricing A: John Keogh discussed financial lines diversity and green shoots in some areas, while Evan G. Greenberg talked about workers' comp growth in middle market and small commercial being opportunistic.