Thank you for standing by, and welcome to the Chubb Limited fourth quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again press the star, one. Thank you. I’d now like to turn the call over to Karen Beyer, Senior Vice President, Investor Relations. You may begin.

Thank you and welcome to our December 31, 2024 fourth quarter and year-end earnings conference call. Our report today will contain forward-looking statements, including statements relating to 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. Please see our recent SEC filings, earnings release and financial supplement, which are 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 directly 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 then we’ll take your questions. Also with us to assist with your questions this morning are several members of our management team. It’s now my pleasure to turn the call over to Evan.

Good morning. Before I begin, I want to take a moment to speak about the terrible tragedy surrounding the California wildfires - the lives lost and tremendous loss of property, a major disaster still unfolding. Our job and the role we play in society is to support our policyholders. Our colleagues have been on the ground, supported by Chubb colleagues throughout the U.S., endeavoring to assist those clients who have lost property, been displaced from their homes and businesses, and had their lives severely disrupted. While it doesn’t erase the enormous difficulty they have and will continue to experience, we’re doing all we can in small and big ways to ease their burden. Our thoughts are with those who have suffered, and our gratitude goes to those firefighters and emergency workers who serve tirelessly. From a financial perspective, our current estimate of the cost of supporting our customers and helping them recover and rebuild from their catastrophe is $1.5 billion net pre-tax and is a first quarter 2025 event. Now turning to our results for the fourth quarter 2024, which you have all seen, we had a great quarter which contributed to an outstanding year; in fact, the best in our company’s history. For the quarter, record P&C underwriting income with a world-class combined ratio of 85.7, together with another quarter of record investment income led to core operating income of $2.5 billion. Operating earnings were up 9.4% on a pre-tax basis or 10.5% per share, though after tax they were distorted by the one-time tax benefit we received last year. Looking through that, operating income was up over 7.5% after tax. Global P&C premium revenue, which excludes agriculture, grew 6.7% in the quarter with good contributions from our P&C businesses globally of North America and overseas general. Premiums in our life insurance division grew 8.5% in constant dollars. For the year, we generated operating income of $9.1 billion, up 11.5% adjusted for the one-time tax benefit and 13% on a per-share basis. Looking more broadly, over the past three years core operating income has grown over 65% and is nearly double the amount from pre-COVID 2019. All three major sources of income for our company produced record results last year. P&C underwriting income of $5.9 billion was up over 7% with a published combined ratio of 86.6. Adjusted net investment income grew 19.3% to $6.4 billion, and life insurance income topped $1 billion. For the year, we grew global P&C premiums 9.9% and life premiums 18.5% in constant dollars. Shareholder returns were strong. Our core operating ROE was about 14% and our return on tangible equity was 21.6. Per-share book and tangible book value grew 8.8 and 14.1 respectively. Our results top and bottom line continue to demonstrate the broad and diversified nature of the company and the consistency of contributions from our businesses around the world - North America, Asia, Europe, Latin America, both commercial and consumer. As we look forward to 2025, we have good momentum and are optimistic about the year ahead, both top and bottom line, catastrophe losses and foreign exchange notwithstanding. Returning to the quarter, our underwriting performance was outstanding while absorbing a more normal level of catastrophe losses. P&C underwriting income was $1.6 billion and the current accident year combined ratio excluding catastrophes was 82.2%, more than two points better than prior year and also a record result. Our prior year’s reserve development in the quarter and for the year was $213 million and $856 million respectively, and speaks to the strength of reserves and conservative nature of our loss reserving practices. On the asset side, we’re investment managers, our other business, and we had another excellent quarter in terms of performance. Our invested assets now stand at $151 billion, and it will continue to grow. For the quarter, adjusted net investment income was a record $1.7 billion, up 13.7%. Our fixed income portfolio yield is 5% versus 4.8% a year ago, and our current new money rate is averaging 5.6%. Peter will have more to say about financial items. Turning to growth, pricing and the rate environment, again global P&C premiums increased 6.7% in the quarter, with commercial up 6.4% and consumer up 7.5%. All regions of the world contributed favorably. Life premiums grew 8.5%. In terms of the commercial P&C rate environment, market trends or themes were consistent with those of the previous quarter. Property has grown more competitive and large account shared and layered at excess and surplus lines while pricing was favorable. Casualty is stable or firming, depending on the class, and overall pricing is ahead of loss cost tracking. Financial lines, particularly directors & officers and employment practices liability, is where more competition is reaching for market share at the expense of current accident year underwriting margins. Overall, market conditions are favorable and we see good growth opportunity for over 80% of our global P&C business, commercial and consumer, as well as for our life business. North America and overseas general, Asia, Europe and Latin America, each with many areas of favorable growth opportunity. Our middle market and small commercial businesses globally, our U.S. excess and surplus business, our U.S. high net worth business, global accident and health and life, international personal lines, our digital business and specialty businesses such as our growing climate plus business. Now turning to the quarter, let me give you some more color by division. Beginning with North America, premiums excluding agriculture were up 6.3% and consisted of 10% growth in personal insurance and 5.1% growth in commercial, with P&C lines up 7.2% and financial lines down 2.9%. We had another strong quarter for new business, up over 22% versus prior year, and our renewal retention on a policy count basis was 90.4%. These again speak to the reasonably disciplined tone of the market and our excellent operating performance. Premiums in our major account and specialty division increased 4.6% with P&C up 5.8% and financial lines down 1.7%. Within major and specialty, our Westchester excess and surplus business grew 8%. Premiums at our middle market division increased 6.2% with P&C up 10% and financial lines down 5%. Pricing for property and casualty excluding financial lines and compensation was up 9.9% with rates up 8.2% and exposure change of 1.6%. Financial lines pricing was down 3.3% with rates down 3.6%. In workers compensation, which includes both primary compensation and large account risk management, pricing was up 4.7% with rates up 2.5% and exposure up 2.1%. Breaking down P&C pricing further, property pricing was up 6.9% with rates up 3.5% and exposure change of 3.3%. Casualty pricing in North America was up 12.7% with rates up 11.8% and exposure up 0.8%. Loss costs in North America remained stable - no change and in line with what we contemplate in our loss pricing. Our North America commercial lines business ran an amazing 83.9% published combined ratio for the year - again, an amazing result. In agriculture, where we are the market leader, our crop underwriting results this quarter were excellent, and we finished the year with $354 million in underwriting profit. Premiums were down from prior year due to lower commodity prices and the formulas for risk sharing with the government. On the consumer side of North America, our high net worth personal lines business had another outstanding quarter with premium growth of 10%, including new business growth of 34%. Premiums in our true high net worth segments, a group that seeks our brand for the differentiated coverage and service we are known for, grew 17.6%. Our homeowners pricing was up over 12% in the quarter and ahead of loss cost trends, which remained steady. For the year, we ran an outstanding 83.6% combined ratio in our high net worth personal lines business. Turning to our international general insurance operations, premiums in the quarter for our retail business were up 7.7% with commercial lines up 10.3% and consumer up 4.7%. From a region of the world perspective, Asia Pacific led the way with premiums up 12.2%. Europe grew 8.2%, including growth of 12% on the continent. Latin America grew just 2.5% and was impacted by foreign exchange. If you adjust for that, Latin America was up 11.5% in constant dollars. In our international retail commercial business, P&C pricing was up 3.7% and financial lines pricing was down more than 6%. Premiums in our London wholesale business were essentially flat. They were up 1.1% with prices down 4% as the London market continued to grow more competitive. For the year, our overseas general business ran an excellent 86.4% combined ratio. Our global reinsurance business had a strong quarter with premium growth of about 20% and finished the year with premiums up 32% and a combined ratio of 85.9, reflecting a more disciplined reinsurance market, both property and pockets of casualty. In our international life business, which is fundamentally Asia, premiums and deposits were up over 26% in constant dollars. In combined insurance company, our U.S. worksite business grew 17.8%. Our life division finished the year with pre-tax income of $1.1 billion, which was ahead of what we originally projected for the year. We have good momentum in our life business, which continues to build. In summary, we had a great quarter and a great year. While we’re in the risk business and there’s plenty of uncertainty in the world, we’re confident that our ability to continue growing operating earnings and EPS at a double-digit rate, catastrophe losses and foreign exchange notwithstanding. Our earnings growth will come from three sources: P&C underwriting, investment income, and life income. Now I’ll turn the call back over to Peter.

Thank you Evan, and good morning. As you just heard, we concluded the year with another strong quarter, contributing to record full-year results across our three primary sources of earnings. Our balance sheet finished the year in an exceptionally strong position with book value of $64 billion and total invested assets of $151 billion. The quarter and full year produced adjusted operating cash flow of $4.2 billion and a record $15.9 billion respectively. It’s also worth noting that during the quarter, AM Best affirmed our company’s rating and stable outlook, and in January S&P affirmed our rating and stable outlook. During the quarter, we returned $1.1 billion of capital to shareholders, including $725 million in share repurchases and $367 million in dividends. We returned $3.5 billion in total for the year, including $2 billion in share repurchases and $1.5 billion in dividends, which represented approximately 38% of our full year core operating earnings. The average share price on repurchases for the year was $269.23. Book value for the quarter and the year was adversely impacted by unrealized mark to market losses on our high quality fixed income portfolio due to interest rate changes, which we expect to amortize back to par over time, as well as foreign exchange losses. Book and tangible book value per share excluding AOCI grew 2.9% and 4.3% respectively for the quarter, and 10.8% and 15.4% respectively for the year. Our core operating return on tangible equity for the quarter and year was 22% and 21.6% respectively, while our core operating ROE for the quarter and year was 14.3% and 13.9%. Turning to investments, our A-rated portfolio, which now has an average book yield of 5%, produced adjusted net investment income of $1.69 billion, which included approximately $25 million of higher than normal income from private equity. We expect our quarterly adjusted net investment income to have a run rate between $1.67 billion and $1.75 billion over the next six months. Regarding underwriting results, the quarter included pre-tax catastrophe losses of $607 million, of which $309 million was from Hurricane Milton and $140 million from Hurricane Helene. The remaining balance was principally from weather related events split 31% in the U.S. and 69% international. Prior period development in the quarter in our active companies was a favorable $352 million pre-tax with favorable development split 17% in long tail lines, primarily from general casualty, and 83% in short tail lines, primarily from property and agriculture. Our corporate runoff portfolio had adverse development of $139 million, primarily asbestos related. Our paid to incurred ratio for the year was 83%. Our core effective tax rate was 18.2% for the quarter and 17.5% for the year, which are below our previously guided range due to shifts in mix of income. We expect our annual core operating effective tax rate for 2025 to be in the range of 19% to 19.5%, including the transition cash tax benefit provided on the adoption of the new Bermuda income tax. I’ll now turn the call back over to Karen.

Thank you. At this point, we’ll be happy to take your questions.

Thank you. We will now begin the question and answer session. Your first question comes from the line of Brian Meredith from UBS. Your line is open.

Yes, thank you. A couple of questions here for me. Evan, I’m wondering if you can dig into a little bit the California fire loss estimate that you’ve given out there. Does it include assessments, subrogation, kind of ground up? Maybe give us a little context on how we should be thinking about the $1.5 billion number.

Yes. First of all, it’s a ground-up number. It’s our own losses. We don’t go off of what we imagine as a total industry wildfire loss and a market share - this is our number that our adjusters on the ground have been able to estimate property by property. It does include an assessment for our projection of an assessment from the fair plan, and we don’t take credit in ours for subrogation.

That’s helpful, thank you. Then my second question, Evan, I’m just curious, looking at 2025, still getting some solid growth in commercial lines, call it mid to high single digit organic growth here in premium. But if you think of 2025, is that kind of a good number to target organically, and then is this kind of the period that we’re looking at, that maybe you should start looking a little bit more at inorganic growth opportunities?

I appreciate your insights, Brian. While we don’t provide guidance on future projections, your reasoning seems sound to me. I didn’t make that statement; you did. Regarding inorganic growth, we're not in a hurry to make investments. It’s about being opportunistic and aligning with our organic strategies, ensuring that any opportunity is the right fit at the right price. We're always searching for possibilities.

Great, appreciate it.

Your next question comes from the line of David Motemaden from Evercore ISI. Your line is open.

Good morning. I have a question for Peter and Evan regarding the favorable long tail reserve development, specifically the 17% of the approximately 350 active companies. It seems that this improvement is driven by general casualty, which marks a shift from what you have reported in recent quarters. Could you provide more details on the favorable development you're observing and clarify which accident year it is associated with?

Well, I’m going to correct your mental model to begin with. Our casualty, we study different portfolios of casualty each quarter. Some casualty portfolios, we have taken reserve strengthening, some portfolios we’ve taken no action, some portfolios we’ve had reserve releases, and there has not been a consistency per quarter except the consistency is the portfolios is we study each quarter, and so a cohort of casualty we studied this quarter had favorable development given the reserve strength in that portfolio.

Thank you for the helpful information. Obviously, we saw strong results in North America commercial, but there was some impact from structured transactions as well. Regarding the 40 basis point headwind, could you explain its effect on the loss ratio and how we should consider the sustainability of that loss ratio in the future?

You’re saying on structured transaction, what’s its impact in the quarter on loss ratio?

Yes.

Structured transactions generally perform well. While we won't provide a detailed breakdown, it's important to understand that they typically have a higher loss ratio compared to the average portfolio.

Got it, okay. Thank you.

David, does that help you?

Yes, that does help. I mean, I guess you guys mentioned the 40 basis points regarding the total combined ratio. I can use that as a placeholder for the potential impact it may have had, possibly a little more significant on the loss ratio.

We don't have the exact number right now, but it’s likely within a certain range.

Got it, understood. That’s helpful. Thank you.

It’s a few basis points, so it’s easy for me to tell you you’re in the range. I mean, it could be 10 basis points up or down, but we’ll take it offline with you and help you.

Thanks.

Your next question comes from the line of Gregory Peters from Raymond James. Your line is open.

Well, good morning everyone. Evan, in response to Brian’s question, you said you love him. I don’t recall you ever saying you love a sell-side analyst, so the new year’s definitely starting off good for us!

Don’t mess it up, Greg!

I'm sure I can. In your press release, you mention that you're experiencing growth in operating earnings and EPS at a double-digit rate. You discuss the three categories: P&C, investment income, and life insurance. Could you provide an overview of the life insurance segment and share where you anticipate growth will come from this year, 2025, and how it will compare to the growth observed in 2024?

Yes, you know, there was a lot of consolidation impact on the life income in the ’23 year and a little bit of noise in ’24. There was one-time stuff in ’23, so to look through the underlying growth rate of that, it produced a really solid double-digit growth rate in income. When I looked through it, it was in that 12% to 14% range. When I look forward, I see that continuing and even strengthening. We have good momentum, and it’s obviously Asia, and it’s both North Asia and it’s Southeast Asia. Our business in Korea, while the revenue growth is not overly exciting, the margin of that business continues to expand and our overall income is growing. It’s a ballast of the business. It’s supported by then faster-growing countries that are growing much more quickly - Hong Kong, Taiwan, China now growing more quickly for us, and each of those producing improved margin and therefore faster income growth. Southeast Asia, with Vietnam and Thailand, they had slower growth this past year, and they’re accelerating as we go forward. Finally, we have two other businesses in Indonesia and New Zealand that are good businesses, picking up momentum. It’s in direct response marketing, it’s in agency, and over 60% of the business, about 70% of it is really accident and health and risk-based type products, and the rest is very conservatively structured savings-related products, because people in Asia, you have two themes, you have an aging population in the north that requires a certain kind of savings and health-related product, and then you have people in Southeast Asia, where it’s a younger population, family-oriented, there are no social safety nets, and so they rely on these kinds of products much more than they do in other parts of the world. I’ll remind you, unlike many regions of the world, these parts of Asia are growing, particularly Southeast Asia. The economic growth is multiples of what we’re seeing in the West, and that just means a rising middle class.

Thanks for the perspective and detail. I guess pivoting to the other bucket, which is P&C, it seems like the broader market is producing some pretty good results relative to longer term averages, and we’re hearing about increased competition across a broader set of lines of business, even you, in your comments, talked about financial lines, so maybe you could spend a minute and give us some perspective on how you think where we are in the cycle and how Chubb is going to be positioned to come out of it.

Yes, it relates to my earlier comment that about 80% of our business growth is influenced by competitive dynamics. As we consider broader economic cycles, I've been reflecting on the current prolonged inflationary phase in the insurance industry, which we've not experienced in a long time. After decades of low inflation, particularly in the short tail class where it has remained mostly flat, and in the long tail side where it has been lower overall, we now face sustained inflation. Consequently, to maintain stability, rates must adjust. However, simply keeping pace with loss costs does not guarantee improvement in margins. Some industry growth is merely to account for inflation. Competition is intensifying, particularly in shared and large account business. This means that large account growth will slow down due to heightened competition in certain lines, like property and layered property. While these are well-priced, maintaining business requires greater competitiveness, making growth more challenging. There’s increased interest in these accounts, which may prevent noticeable growth but still yield favorable results moving forward. The same scenario applies to excess and surplus property and the financial lines in large accounts. Although primary casualty isn't a strong growth area, it plays a crucial role in supporting the growth of other lines in large accounts. In contrast, the middle market and small commercial sectors present significant growth opportunities across various segments. Moreover, we are witnessing certain secular changes globally, not just in the United States. The consumer lines, including high net worth and personal lines outside the U.S., alongside our accident and health businesses focused on the middle class in Asia and Latin America in both life and non-life sectors, point to considerable potential. Overall, this gives a clearer picture of our position and direction moving forward.

Yes, it does. What did you mean by the secular change comment?

In the middle market in the United States, for example, due to changes in climate and catastrophe activity, along with shifts in the legal environment regarding the trial bar and social inflation, regional and mutual insurers are facing greater challenges. They lack the necessary data, strong balance sheets, extensive business relationships in reinsurance, and technology to compete effectively. This situation is gradually shifting market share toward a few larger companies.

That makes sense. Thanks for the answers.

Your next question comes from the line of Meyer Shields from KBW. Your line is open.

Great, thank you. Good morning. First, I was hoping you could walk us through any changes to your reinsurance purchasing at January 1.

None.

Okay, that’s pretty easy. The second, I don’t know if this is significant, but

Yes, I would have done it, but it did nothing.

That’s fine, makes sense there. There was a little bit of an uptick in administrative expenses in North America commercial, and I was hoping you could walk us through that. I don’t know if it’s incentive compensation or something else.

A little uptick in what in North America?

The admin expenses.

No, it’s just - oh my God, it’s 0.1%. It’s just noise.

Okay.

Meyer Shields, the analyst, noted a slight increase in administrative expenses in North America commercial and asked for clarification on whether it was due to incentive compensation or another factor. Evan Greenberg, the Chairman and CEO, inquired further about what specifically had increased in North America. Meyer Shields clarified that he was referring to the administrative expenses. Evan Greenberg then responded that the increase was minimal, only 0.1%, and considered it to be insignificant noise. Meyer Shields acknowledged this.

I’m sorry, go ahead?

It’s just 0.1%. It’s just noise.

Yes, I was looking for dollars, not the percentage.

No, nothing. It’s just variability in the quarter.

Okay, perfect. Thank you so much.

There’s not a trend in that.

Your next question comes from the line of Mike Zaremski from BMO. Your line is open.

Hey, morning. First is a follow-up to your insights about the secular change in the U.S. middle market space. If I think through your comments in the past, Evan, you’ve said that Chubb has aspirations to move more down market, and your definition of mid market or small market might be also different than some of the peers. But just curious, if you’re painting a picture that Chubb’s competitive advantages are growing versus some of its peers, would you still have aspirations to do kind of inorganic things in the small midmarket space in the U.S., or less so as time goes on?

Our focus is on organic small and middle market, and it’s organic. That is our focus and has been our focus. Anything that’s inorganic is simply opportunistic, and that’s not our focus. It’s opportunistic.

Okay, and lastly switching gears, on the investment portfolio, there’s been a bit of an increase in equities over the last couple quarters - we’re up to about $9 billion. Anything changing there in terms of over the next year, you expect to see a different mix shift in the investment portfolio? Thanks.

Mike, it’s Peter. Firstly, the specific $5 billion shift involves us reallocating approximately $5 million of investment-grade corporates into a fund for investment efficiency purposes among different entities. The foundation remains investment-grade fixed income, but due to GAAP requirements, we must report it as equity, so there’s no actual change beneath the surface. Looking ahead, we have discussed our strategy, which you will find in the investor presentation; there will be a minor adjustment in investment allocation, which we've outlined in that investor deck.

Thank you, Peter.

Your next question comes from the line of Andrew Kligerman from TD Cowen. Your line is open.

Thank you, good morning. Evan, in casualty lines, you mentioned the 12% rate increase for North America - that sounds really solid. But in reinsurance, you said there were pockets of strength, and I’m hearing overall in reinsurance casualty, there’s a lot of softness going on. One, why the disconnect; and two, what are those pockets of weakness in casualty reinsurance?

There are opportunities in reinsurance casualty, but we need to be very selective. We have not been significant players in this area and have actually reduced our involvement over the years as we did not see profitable underwriting conditions in the market. While the market is currently stressed in reinsurance casualty, we do observe some selective opportunities, but I don't want to exaggerate the situation.

Got it.

Relative to travel, it’s not big money.

Got it. Then regarding the financial lines.

It's opportunistic trades.

Got it. Then with regard to financial lines, it looks like that’s the area where you’re seeing premiums decline across the board. It’s been about three years now of continuous decline, particularly in public D&O. What is it that players like about it, that they continue to go after it and you just don’t think it’s good business at this point?

Well, we love the business. It’s the pricing.

Yes.

During the pandemic, there was a noticeable decline in securities class actions and other forms of loss, such as employment practices liability during the financial crisis, resulting in favorable outcomes for those years. The current situation suggests that losses, particularly the number of securities class actions, are returning to normal levels. In some areas, like employment practices, the frequency of losses is actually rising rapidly. The severity of losses continues to trend upwards, and many do not recognize or overlook the implications for current accident year margins and the associated pressures. We are aware of these dynamics, as we have a substantial portfolio in this business, and Chubb is a leader across various classes. We are patient and adept at navigating these phases. While it may not be pleasant to confront these realities, we still have ample opportunities in other areas.

Makes a lot of sense, thanks.

Your next question comes from the line of Alex Scott from Barclays. Your line is open.

Hey, good morning. First one I had for you all is on sort of the fallout from what we’re going to see in California from the wildfires, and I guess specifically, what will your approach be to the market going forward? Will you have to make any changes in the way you approach that market, and just interested in any thoughts you have on what needs to be done to sort of stabilize the insurance market there.

Yes, thank you for that question. Look - California is a difficult market for insurance companies, and it has only become more difficult over time. The state along with the pressure it receives from consumer advocacy groups suppresses the ability to charge a fair price for the risk and tailored coverages to improve availability and affordability of insurance for the citizens of the state. Insurers are unable to generate a reasonable risk-adjusted return commensurate with the risk of insuring natural perils such as wildfire and the cost in California associated with reconstruction following a disaster. This suppression of pricing signals, which are rising, encourages more risk-taking by individuals and businesses as to where they choose to live or work, and it encourages less risk management or loss mitigation activity, and they’re part as well by federal and state and local governments, who all have a hand in loss mitigation activity that actually is occurring, or not occurring. In a word, economics incent behaviors, and California is impacting those economic signals. As insurers have reduced their exposures in the state, the state has offered more under-priced coverage through its own insurer of last resort. Frankly, it’s an unsustainable model, and one way or the other, the citizens of the state pay the price for coverage. California is not alone in this regard, but it certainly stands out. We’ve been shrinking our exposure in California for some time; for example, in the area where the wildfires occurred, our exposure has been reduced by over 50%. We’re not going to write insurance where we cannot achieve a reasonable risk-adjusted return for taking the risk.

That’s really helpful. Maybe just a follow-on question to that, would you expect what’s going on in California and sort of the fallout from that to affect property pricing more broadly? I mean, it seems like the world’s becoming a riskier place and certainly price adequacy has seemed pretty good in property and other areas, but will this be enough to change thinking, whether at the primary or reinsurance level, in your view?

It's too early to determine the full impact. I’m uncertain about the situation right now. As the loss becomes clearer and increases, more of it will start impacting reinsurance and other balance sheets. The key question is the total size of the loss and where it will ultimately be reflected. This will influence whether there will be a broader effect on property pricing, which I believe is currently satisfactory. It underscores the importance of maintaining adequate pricing within the industry.

Your next question comes from the line of Elyse Greenspan from Wells Fargo. Your line is open.

Hi, thanks. Good morning. My first question, can you guys provide, I guess, what the current excess capital drag on your ROE is?

I'm sorry?

The current excess capital ROE drag. Yes, we haven’t disclosed that in a while, Elyse; and again, how we’re thinking about things, consistent with what we talked about in our investor presentation, is looking at our capital as also a source of investment as we gradually and incrementally increase our asset allocation towards alternatives. That’s just starting, so I’ll say right now, looking at the year behind us, it will be in a range similar to, call it a year ago that we discussed and people backward computed, so. It was in the range of ROE looking backwards of around 2% on ROE and 6% on ROTE.

That's helpful. For my second question, you provided tax guidance, and I remember you mentioning it includes some transition cash tax benefits from Bermuda. I also thought there was a possibility of reversals of the deferred tax assets that were established, so I'm assuming that might not occur this year but could be a couple of years away. Are you just assuming there won't be any changes in the deferred tax asset structure that was set up last year?

Yes Elyse, from an accounting standpoint, it’s based on Bermuda law, which is not expected to change. If there are any changes, we would need to reevaluate. Recently, the OECD released some administrative guidance that we need to analyze for its applicability. As you may have noted, the new administration has indicated they will not participate in the OECD's global minimum tax initiative, which gives us a clear idea of our position for 2025 and 2026, although the long-term outlook remains very uncertain, especially with the new administration and the lack of participation from major countries like China and India.

It never involved Swiss law.

Swiss law, yes.

Yes, it’s messy.

You have been discussing competition in financial lines for some time and have obviously scaled back. What do you believe it will take for conditions to improve in that area? Are you not anticipating any changes in the near term?

I believe that as losses arise and the situation stabilizes, that will serve as a positive factor.

Your next question comes from the line of Yaron Kinar from Jefferies. Your line is open.

Thank you, good morning. Evan, at the risk of maybe changing your sentiment around the sell-side analysts here so quickly, I do want to go back to something I asked last quarter with regards to North America commercial premium growth, which was 2% on a gross premium basis. I’m just trying to reconcile that with the pricing environment, which seems to be ahead of that, and the opportunities that you’re seeing and the appetite that you have. Maybe you can walk us through the puts and takes there.

I’m not sure what you mean; could you clarify?

Sure. Your gross premium growth was 2%. I believe the pricing environment in North America for P&C is above that figure. It also appears to reflect a positive raw trend.

I think you have to start with net premium growth, not gross premium growth.

Why would that be?

Net gross premium growth has various distortions due to the transactions we undertake, which can skew the numbers, particularly with large transactions such as self-insured or structured programs. This causes fluctuations in gross premiums based on client premium flows. In contrast, mid-market businesses have a more consistent pattern. However, with large accounts and gross lines, especially in excess and surplus business, there's significant noise and variability. It's essential to focus on net premiums first. I'm sharing this perspective not for debate, but as an explanation.

Fair enough, and if we take the net premium growth, which was 5%, versus roughly 7% pricing?

There is a combination of business and retention at play. It doesn't translate directly, as it never does. You begin with the retention rate, then add new business, and you have to analyze it line by line and consider the mix of it. Overall pricing is important, but it needs to be adjusted according to the business mix.

If you want, offline we will give you a simple math lesson of that and take you through it.

Great, I’m always eager to learn. Thank you. You got it.

That concludes our question and answer session. I will now turn the call back over to Karen Beyer for closing remarks.

Thank you everyone for joining us today, and if you have any follow-up questions still, we’ll be around to take your call. Enjoy the day, thank you.

This concludes today’s conference call. Thank you for your participation. You may now disconnect.