Chubb (NYSE:CB) held its second-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.

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The full earnings call is available at https://events.q4inc.com/attendee/777339998

Watch the full earnings call below:

Summary

Chubb Limited reported strong financial performance for Q2 2026, with core operating earnings of $2.8 billion, up 14.6% year-over-year, and a core operating ROE of 14.5%.

The company's P&C underwriting income increased by 19% to over $1.9 billion, with a combined ratio of 83.8%. Adjusted net investment income reached a record $1.88 billion, driven by strong fixed income performance.

Chubb announced a new $7.5 billion share repurchase program, effective July 1st, and returned $1.4 billion to shareholders in the quarter through buybacks and dividends.

The company highlighted its global diversification and disciplined underwriting as key strengths, with significant growth in international markets, particularly in Asia and Latin America.

Concerns were raised about competitive market conditions, especially in U.S. large account property and E&S casualty lines, where pricing may not keep pace with loss costs.

Chubb's book value per share reached an all-time high, and the company remains confident in its ability to generate strong growth in operating earnings and tangible book value.

Management expressed a cautious outlook on market conditions but emphasized the company's resilience and strategic positioning for long-term wealth creation.

Full Transcript

Jalen, Operator

Thank you for standing by. My name is Jalen. I will be your conference operator today. At this time I would like to welcome everyone to the Chubb Limited second quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press Star followed by the number one on your telephone keypad.

If you would like to withdraw your questions, simply press Star one again. I would now like to turn the conference over to Susan Spivak, Senior Vice President, Investor Relations. You may begin.

Susan Spivak, Senior Vice President, Investor Relations

Thank you and welcome to our June 30, 2026 second quarter earnings conference call. Our report today will contain forward-looking statements including statements relating to the company performance, pricing and business mix, growth opportunities and economic and market conditions which are 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, and Chris Hogan, our Chief Investment Officer. Then we will take your questions.

Also with us today to assist with your questions are several members of our management team, and it's now my pleasure to turn the call over to Evan.

Evan Greenberg, Chairman and Chief Executive Officer

Good morning. We had a very strong quarter. The results speak to our strengths and competitive profile, the health of our balance sheet, the growth of our invested asset and the diversification of our businesses globally with the opportunities they present, all set against our disciplined approach to underwriting. Strong P&C underwriting, investment and life income results led to core operating earnings of $2.8 billion or 726 per share, up 14.6% and 18.2% respectively over the prior year.

Our most important measure of shareholder wealth creation, tangible book value per share, is up 17.1% year over year. Our annualized core operating return on tangible equity was 21.2% for the quarter and core operating ROE was 14.5%. P&C underwriting income was more than 1.9 billion, up almost 19% with a combined ratio of 83.8 on a current accident year basis. Excluding CATs, the combined ratio was 82.2%. On the investment side of our business, adjusted net investment income was a record 1.88 billion, up more than 11%, supported by excellent performance in our fixed income and alternative asset portfolios.

The fixed income portfolio yield was 5.1 and our current new money rate averaged 5.5% as of June 30. Our invested asset now stands at 175 billion, up from 161 billion a year ago. Life income of 332 million was up 9%. As you know, we are well diversified globally by geography and product and by the type of customer we serve in both commercial and consumer businesses. And we are well diversified by distribution channel, reaching customers the way they want to buy.

Our pattern of growth speaks to this. The substantial majority of our businesses are growing with the balance flat or purposely shrinking due to inadequate pricing or terms. The most obvious and visible example of this is U.S. large account and E&S property, where we again shed a significant volume of premium. Property aside, the vast majority of the balance of our businesses in the U.S. and globally are growing at various rates, some faster, some slower, market and macro conditions dependent, including personal lines, small and middle market, commercial A&H, life, and even large account business excluding property.

Peter's going to have more to say about financial items. Looking more closely at growth, pricing and the rate environment, global P&C premiums were up 3% or 6.3 excluding large account property. Overseas General grew 10.2% or 4.8 in constant dollar. North America was up about a half a percent with commercial down 2.3, while personal lines and ag were up each 6%. Commercial was up 4.1, major and specialty property again, aside. For context and observing from a broader perspective, soft market conditions have begun to spread beyond property to more casualty lines, particularly E&S. So those certain classes of large account and middle market are growing more competitive. Pricing in numerous areas of casualty are failing to keep pace with loss costs which are hardly benign. Keep in mind U.S. casualty loss costs are rising at a pretty steady 6 to 7% for primary casualty and 9.5 to 12% for excess. That's per year and it varies by class of business as to whether it's rising 6 or 7 or 9.5 or 12. Pricing becomes marginal or inadequate pretty quickly when you're running those kinds of loss costs.

In the meantime, financial lines continues to be soft and here we notice an unsurprising pattern where experienced large companies are much more disciplined and rational while naive newer players, particularly financial lines MGAs and smaller companies, are underwriting in prices and terms that are inadequate. In fact, of late we've observed brokers securing coverage terms from these markets that experienced underwriters discontinued 20, 25 years ago, and for good reason.

Again, from Chubb's perspective, while all this impacts us, we are so well diversified that it has relatively and absolutely less impact overall. With that as a baseline, I'm going to give you more color on the quarter by division and region. Our international retail business, which produces more than 17 billion in gross premiums annually, operates in 51 countries and is about 90% of our Overseas General division, and it grew almost 12% in the quarter or about 6 in constant dollar.

Consumer-related businesses, both A&H and personal lines, were up more than 12% with commercial lines up over 11. Latin America grew 15.6%, Asia grew 12%, Europe grew nearly 7.5. In our London wholesale business, the market is highly competitive and not only in property. It's worth noting that London is actively writing U.S. casualty for the last few quarters, a movie we have seen before. The volume is growing and at rates and terms that can only end one way.

There's a reason U.S. casualty is going to London and it isn't due to a lack of capacity in the United States. Premiums in our London wholesale business, which is about 10% of international P&C, were down about 1% in the quarter. In North America, commercial premiums in our middle market and small commercial division grew almost 9% with P&C lines up 12 and financial lines down about 3. This is a powerhouse franchise which produces more than 9.5 billion in gross premiums annually with a vast geographic footprint and broad product capability serving small and mid-sized companies of all kinds from a wide range of industries.

Premiums in major account and specialty or E&S declined 9% in the quarter because of property. In North America, pricing for commercial property and casualty excluding financial lines and comp was up 1.3% with rates down 1.4 and exposure change of 2.7%. Property pricing was down about 6 with rates down 10.5 and exposure up 5.2. But going a step further, property pricing was down 12% in shared and layered major and specialty for the business we wrote.

Market pricing for the business we gave up or passed on was down around 40%. In middle market and small commercial, property pricing was up 2.3%. Casualty pricing in North America was up 7.1% with rates up 6.4% and exposure up 0.7, and financial lines pricing was up 0.3. On the consumer side of North America, our high net worth personal lines business, the clear market leader in that category, had a really good quarter with premium growth of 6% and renewal retention on an account basis of 90%.

Our North America personal lines business is now more than $8 billion in gross premiums annually. In our international life insurance business, premiums and deposits rose almost 14.5%. The vast majority of our life exposure, as you know, is in Asia and the majority of our growth is in North Asia, meaning China, Hong Kong, Korea and Taiwan. Premiums in our North America Chubb Worksite Benefits business were up 14%. Our Life division produced 332 million of pre-tax income in the quarter, up 9% from last year.

The Life division now produces annual premiums of over eight billion. Five years ago it was two and a half billion. Our diversification, presence and capabilities globally and our operating discipline provide us with continued growth opportunities and resilience. This quarter's results add to a long track record that demonstrates we are a consistent compounder of wealth. We're an all-weather firm; we have many sources of opportunity on both the liability and the asset side of the balance sheet.

And we are patient. CATs and FX aside, I'm confident in our ability to continue to outperform and to generate strong growth in operating earnings and EPS and, most important, double digit in tangible book value, our most important indicator of shareholder wealth. I'll now turn the call over to Peter, and then I'm going to come back and we're going to take your questions.

Peter Enns, Chief Financial Officer, Chubb Group

Thank you, Evan, and good morning. We had another strong quarter led by our P&C divisions globally, growing Life business and strong investment performance, all of which further strengthened our financial position, including invested assets of 175 billion and 3.5 billion of adjusted operating cash flows. There are a few capital-related matters I'd like to touch on. First, we issued 2.2 billion of debt across a few currencies at a weighted average cost of 4.2% and an average term of about 7.5 years.

The use of proceeds is for general corporate purposes, which includes the repayment and refinancing of debt. Secondly, in May our board authorized a new 7.5 billion share repurchase program that took effect on July 1st with no expiration date. In the quarter, we returned 1.4 billion of capital to shareholders including 979 million in share repurchases at an average price of $327.18 per share and 395 million in dividends. We ended the quarter with an all-time high in book value of 75 billion or $195.45 per share.

Book and tangible book value per share excluding AOCI grew 2.8% and 3.8% respectively for the quarter and 11.4% and 15.8% from last year. Pre-tax catastrophe losses were 475 million for the quarter, principally from weather-related events in the U.S. Prior period pre-tax development in the quarter in our active companies was a favorable 441 million, split 89% short-tail lines and 11% long-tail lines. Our corporate runoff portfolio had adverse development of 158 million with over two-thirds of that coming from molestation-related claims development.

Our paid-to-incurred ratio for the quarter was 90%, and our net loss reserves increased to nearly 69 billion, representing a growth of 4% from the second quarter last year. Excluding CATs, PPD and Agriculture, our paid-to-incurred ratio was 86%. Our core operating effective tax rate is 19.2% for the quarter, which is below our previously guided range, due to shifts in the mix of income and discrete tax benefits related to equity awards and certain investments.

We continue to expect our core operating effective tax rate for the full year to be in the range of 19.5% to 20%. Turning to investments, our A-rated portfolio increased about 2.5 billion in the quarter to 173 billion and is up 14.3, or 9%, over the last 12 months, supported by approximately 16 billion in adjusted operating cash flows. Adjusted net investment income of 1.88 billion was above our previously guided range primarily due to strong growth in the invested asset base and higher-than-projected private equity income.

To give you a bit more color on investment income and the portfolio, I'll turn it over to our Chief Investment Officer, Chris Hogan.

Chris Hogan, Chief Investment Officer

Thank you, Peter. Good morning, everyone. Our public fixed income portfolio generated $1.63 billion of income in the quarter, up 12% year over year, and our private investments, which make up 12% of the portfolio, contributed $250 million of income, up 9.5% year over year. Our fixed income portfolio will continue to generate consistent and growing quarter-to-quarter income and, as we thoughtfully grow our private investments, income from that book, while more variable, will continue to trend higher over time.

This is an ideal environment for investment-grade bond investors. Our reinvestment rate of 5.5% is a structurally attractive level sitting well above the portfolio's book yield of 5.1%. The portfolio and insurance operations continue to generate excellent cash flow that we're investing at yields that both compound book value and drive significant income growth. Financial assets in many markets are expensive and priced to perfection. At the same time, longer-term yields remain exposed to structural pressures: rising federal deficits, corporate credit demands, persistent inflation, and the potential for foreign rotation out of U.S. assets. These forces may lead to higher yields, wider credit spreads, and pressure on risk asset valuations. We remain disciplined and focused on risk-adjusted returns, maintaining a substantial balance of high-quality, liquid investment-grade assets and a conservative duration. This positioning is central to our current strategy. It will allow us to move quickly to take advantage of market dislocations as opportunities develop. I'll now turn the call back over.

Thank you.

Susan Spivak, Senior Vice President, Investor Relations

At this point, we're happy to take your questions. Operator, please open up the line for questions.

Jalen, Operator

Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press Star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press Star one again. If you're called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

We do request for today's session that you please limit yourself to one question and one follow-up. Your first question comes from the line of Matt Heimerman of Citi. Your line is open.

Matt Heimerman, Analyst at Citi

Hey, good morning everybody. A couple questions. First question is just international Life and Accident and Health. There were some regulatory decrees, changes in Singapore on deductibles for accident and health, and then investor-related products in Hong Kong for Mainland China visitors. I'm just curious if there was any impact in the quarter or any product redesign required.

Evan Greenberg, Chairman and Chief Executive Officer

Sorry, they were playing with the buttons here for a second. Matt, could you— can you just repeat the question itself?

Matt Heimerman, Analyst at Citi

Sure. So in Singapore there were some regulatory changes to deductible levels for accident and health products. And in Hong Kong, obviously there was a decree related to investment products for Mainland China visitors. I'm just curious whether or not those had any material impact on flows in the quarter, if there's any need to change product design at all to address those.

Evan Greenberg, Chairman and Chief Executive Officer

No, I'll keep it simple. No, there was no impact. We don't write that kind of accident and health that you're imagining in Singapore. Remember, we write supplemental health. We don't write traditional major medical and typical hospitalization. That's not our business. And that's what the Singapore decree that you referenced was about. So no impact to us there. It's not our game. And in Hong Kong on the flows, I think there's an overreaction. First of all, we did not have an impact and I don't expect an impact on Chubb going forward.

I think there was an overreaction to the government and the regulator pronouncements and actions they took. They were really around what I'll say, bad actors, those who were abusing the system and the rules that are in place that allow capital flows north to south and allow for investment products in Hong Kong.

Matt Heimerman, Analyst at Citi

Thanks for that. And then just one follow-up, taking a step back, you have got pretty sober views of market conditions and I would say that's a pretty consistent perspective that I think you bring to looking at the market. I guess, how— and I would say increasingly that feels a bit different in terms of potentially prospective views on profitability from some of your other competitors. I'm curious what they see that might be different than what you're seeing and just how you're thinking about the distribution of outcomes as it pertains to the market today.

Evan Greenberg, Chairman and Chief Executive Officer

Yeah, I can't— I'm not in the heads of others and I don't, you know, I don't know what their specific—

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.