Chubb Ltd (CB) Q1 2026 Earnings Call Transcript

Thank you for standing by. My name is Jael, and I will be your conference operator today. At this time, I would like to welcome everyone to the Chubb Limited first 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 1 on your telephone keypad.

If you would like to withdraw your question, simply press star 1 again. i would now like to turn the conference over to susan spivak senior vice president investor relations you may begin thank you and let me add my welcome to our march 31st 2026 first 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 release and financial supplements. 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. Then we'll take your questions. Also with us to assist with your questions are several members of our management team. And now it's my pleasure to turn the call over to Evan.

Good morning. We had an excellent quarter and start to the year. Our results speak to the strength and resilience of our company in a period of elevated uncertainty. They also speak to our globally diversified business opportunities on the one hand, and our disciplined approach to underwriting on the other. I want to first start with a few words about the external environment. War in the Middle East raises the specter globally of higher inflation and potentially slower economic growth. To what degree, the timing and the pattern are all unknowable at this time. However, the impact of the war adds a degree of pressure to certain financial, fiscal, and economic stresses, such as underlying inflation, fiscal deficits and sovereign debt, global supply chains and financial valuations, including equity and credit, and a growing energy shortage, to name a few. In times of stress, I like Chubb's position, given the strength of our balance sheet, earning power and liquidity. Now turning to our results, strong growth in PNC underwriting, investment, and life income led to core operating earnings of $2.7 billion, or $682 per share, both up substantially over the prior year first quarter, which was of course impacted by the California wildfires. adjusting for this, so excluding cap losses. Core operating income was up 10.7%, and EPS was up 13.5%. And most important, tangible book value per share grew 21.5%. Total company net premiums grew 10.7% for the quarter, to more than $14 billion. dollars. PNC premiums grew 7.2 and life grew more than 33 percent. Both benefited from foreign exchange. Our underwriting performance in the quarter was excellent. PNC underwriting income was 1.8 billion with a combined ratio of 84 percent. And on a current accident year basis, excluding CATS, underwriting income grew 9.8% and a combined ratio of 82.1. On the investment side of our business, adjusted net investment income of 1.8 billion was up more than 10%. Our fixed income portfolio yield was 5.1 and our current new money rate average was five and a half percent as of March 31. Our invested asset now stands at 170 billion up from 152 billion a year ago. Again, these results top and bottom line put a point on the broad-based diversified nature of the company by geography and product, by both commercial and consumer customer segments, and by distribution channel our annualized core operating return on tangible equity was 20.6 percent and our core operating roe was 14. peter's gonna have more to say about financial items turning to growth pricing in the rate environment pnc premiums grew 7.2 percent with consumer up 14.2 and commercial up 4.6%. Overseas general grew 14.4% or 6.1 in constant dollar. Total North America was up 4.1 or 7.8% excluding large account property, both admitted in ENS, which we purposely shrank given what we judge to be inadequate pricing levels. In a number of important markets, property and financial lines pricing conditions are soft. With property pricing in those markets, softening in a price that frankly I'll only describe as dumb. With that as a baseline, I'll give you some more color on the quarter by division and region. I'm going to begin as I did last quarter with our international PNC business. Premiums in our international retail business, which operates in 51 countries and is 90% of overseas general, were up more than 15%. Consumer related premiums, both accident and health, and personal lines were up over 20%, with commercial lines up over 11%. Europe grew 17.5%, with consumer and commercial both up double-digit. Asia grew more than 12%, and Latin America grew almost 18%. In our international retail commercial business, P&C rates were down 2.5%, and financial lines rates were down 7.4%. Our selected loss cost trends in our international retail business was 3.7%, or 130 basis points lower than 25. In our London wholesale business, the market has become highly competitive, particularly but not only in property, and we purposely shrank our open market property business. Premiums in our London wholesale business, which is 10% of international PNC, were up almost 8%. Turning to North America, total premiums, again, grew 4.1%, including 8.3% growth in personal lines and 2.8% in commercial, excluding large account property, both admitted and ENS, and that's shared and layered property. Total North America commercial premiums rose 7.7%, a very good underlying result. Breaking it down further, premiums in major accounts and specialty, or ENS, grew one and a half, or 10.9, excluding shared and layered property, which again, we shrank. Growth was driven by a broad range of casualty, marine, surety, and risk management businesses. Premiums in middle market and small grew 3.3 percent, with P&C lines up almost five and a half and financial lines down 5.7 or flat when adjusting for the impact of just additional reinsurance we chose to purchase. In North America, pricing for commercial property and casualty, excluding fin lines and comp, was up 4.6 percent, with rates up 2.2, an exposure change of 2.3. Property pricing was down 2.6, with rates down 6.3 and exposure up 4%. However, going a step further, property pricing was down 14.3 in shared and layered measure and specialty for the business we wrote. Market pricing for the business we gave up or passed on was down between 30 and 40%. The larger the premium, the greater the price discount. On the other hand, in middle market and small commercial, property pricing was up one and a half percent. Casualty pricing in North America was up 9.6%, with rates up 8.4 and exposure up 1.1. Work comp pricing was up 4.3% and FinLine's pricing was about flat. Our overall selected loss cost trend in North America commercial was little changed, with no change in casualty and other long tail lines. On the consumer side of North America, our high net worth personal lines business had a very good quarter, with premium growth of 8.3 percent and renewal retention on an account basis of 92 percent. Homeowner's pricing was up 7.7 percent in the quarter. And in our international life insurance business, premiums rose 37 percent. Premiums in North America job worksite benefits business were up almost 16 percent. Our life division produced $316 million of pre-tax income in the quarter, up 8.5%, and adjusted for a few one-time items that benefited last year's first quarter, life was up 11.5%. In sum, we're off to a very good start in 26, and we had an excellent first quarter. From a macro perspective, over time, difficult environments generally advantage strong companies over weaker ones. Chubb's diversification, market-leading presence and capabilities, and operating discipline provide us with resilience when the macro environment is uncertain. We are patient and have many sources of opportunity on both the liability and the asset side of the balance sheet. From what I can see, CATS, et cetera, aside, I remain confident in our ability to continue generating strong growth in operating earnings and double-digit growth in EPS and, most important, tangible book value. I'll turn the call over to Peter and then we're going to come back and take your questions.

Thank you Evan. Our first quarter results were strong and we concluded March in an excellent financial position supported by balance sheet strength and liquidity including record cash and invested assets of nearly 173 billion and 3.8 billion of adjusted operating cash flow. During the quarter we issued 200 million Swiss francs or approximately 250 million US dollars of six year debt at a very attractive cost of one percent we returned 1.5 billion of capital to shareholders including 1.1 billion in sherry purchases and an average price of 325 dollars and six cents per share and 380 million in dividends we ended the period with an all-time high in book value of nearly $74 billion, or $189.93 per share. Book and tangible book value per share, excluding AOCI, grew 12.1% and 16.5% from last year. Our core operating return on tangible equity and core operating ROE in the quarter were 20.6% and 14%. Pre-tax catastrophe losses were $500 million for the quarter, principally from weather-related events split 87% U.S. and 13% international. Pre-tax prior period development in the quarter in our active companies was favorable $301 million, comprising $322 million of favorable development in short-tail lines and $21 million of unfavorable development in long-tail lines. Our corporate runoff portfolio had adverse development of $15 million. Our pay-to-incurred ratio for the quarter was 87% and our net loss reserves increased to nearly $69 billion, representing growth of 5% from first quarter last year. Turning to our investments, our A-rated portfolio increased about $1.5 billion from strong operating cash flow and positive foreign exchange gains partially offset by $1.6 billion of net unrealized losses from an increase in interest rates and wide widening of credit spreads. Adjusted net investment income of $1.84 billion was at the top end of our previously guided range, primarily due to the increase in our invested asset base and stronger private equity returns. We expect adjusted net investment income in the second quarter to be between $1.825 billion to $1.85 billion. Our core operating effective tax rate of 19.3 percent for the quarter was slightly below our previously guided range primarily due to compensation related equity rewards which vest in the first quarter. We continue to expect our core operating effective tax rate for the full year to be in the range of 19.5 to 20 percent. I'll now turn the call back over to Susan.

Thank you, Peter. At this point, we're happy to take your questions.

Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon asking 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 And for today's session, we do request that you please limit yourself to one question and one follow-up. Your first question comes from the line of Bob Huang of Morgan Stanley.

Your line is open. uh hi good morning uh my my first question is on the geopolitical commentaries you had in your opening remarks uh can you maybe help us unpack that that this concept a little bit just um we're hearing inflationary concerns out of asia out of parts of europe due to the uh the conflict in iran um do you see that at some point in time affect pricing expectations in the u.s market if the conflict kind of drags on longer than expected. Just curious your thoughts on that.

You know, as I said, the degree, the pattern, the timing is unknowable. However, global supply chains depends substantially you mentioned Asia us we depend on supply chain through Asia we depend on supply chain through Mexico and other parts of the world the impact of the Gulf on supply chain availability commodities and other inputs and the impact to shipping, of course, is going to have an inflationary impact. How that passes through to inflation in the U.S., the degree of it and where it actually shows up is not really knowable at this time. But it isn't going to be zero, that's for sure. And how transient it is, is unknowable also. Longer it goes on, stickier it will be. That's sort of the mental model I have. How it'll pass through on insurance, I don't know. I'm not, it's not something that I'm really wringing my hands about. I'm concerned about. It'll likely be short-term transient. We'll see what it is when it shows up, and we will respond to it accordingly.

Got it. Really appreciate the thoughts. My second question is on the small market ENS business and AI. So when we think about Trump's small market ENS business, that has grown fairly well over the past and as we think about you deploying more ai capabilities either it may be through distribution or just internal capabilities on underwriting um can you maybe help us to think about the growth trajectory over the next five years is it fair to say the ens market for you this specifically the the smaller end of that can grow multiple times bigger in five years time is that the right way to think about it um i think about it a little differently i think about the small commercial market retail and ens um i actually think the the the greater opportunity

for growth is in the vast retail end of it versus the E&S, but it's both. And what we have done to transform that business and what we're continuing to do to transform it, including with the use of AI and now with what's in front of us with agentics within AI and evolving large language model capabilities and enterprise software that emerges from that as well, yes, it is a real growth area for our company over the next five years. And by the way, not simply North America. Um, we expect significant growth, um, in various markets internationally that may ultimately dwarf North America.

Your next question comes from the line of Mike Zaremsky of BMO Capital Markets. Your line is open.

Hi, thanks. Good morning. Um, you know, um, question regarding some of your commentary, um, around the, uh, the pricing cycle, specifically in the larger account marketplaces where you called out pricing power is declining, I think, more than you feel makes sense to Chubb. You also called out kind of the London specialty market is getting more competitive. I'm curious, you've been through lots of, you and your teammates have been through lots of cycles. What's causing the competition this time? Is it just simply what you've seen before and folks, are getting excited about increasing their top-line growth in a softening marketplace, or is there some other causes this time that you want to call out?

Yeah. Thank you. You know, and let's step back and put a perspective on it, too. The market rates. So I gave you, Chubb, I gave you what we lost business for. If I sort of step back and look at overall market rate in Sheridan Layard, in North America and in London, pricing overall is off 25% in the quarter, heading to 30. You can actually see it's accelerating in that trend. And by the way, loss costs, to put a point on it, loss costs, they're moving at about 4% to 5% in shared and layered property. So you can work out the math there. It's always supply-demand. So it's the amount of supply, which is capital, that is chasing a relatively finite amount of business. And by the way, in a concentrated way, if it's E&S and it's London or it's in the United States, it's boxed up and brought to underwriters. You can access it. It's not like retail business. generally. And it's urban-based. It doesn't take a lot of capability. It takes some balance sheet capital and a couple of underwriters. And, you know, you're in the market. So it's a hunger that way. The difference, and I wrote about it in the shareholder letter so you can read that. I won't repeat at all. The structural difference this time is simply how the capital is showing up. And it's showing up, a lot of it, in a volume-based incentive system. MGAs, you know, the majority of them. It's just volume-based. What do they bring? They bring a cheaper price and a higher commission. And it's the reinsurance market and it's alternative capital and the number of bites of the apple in the supply chain taken by intermediation. That is what you are reflecting here. And by the way, the loser at the end of the day is the ultimate risk taker who puts up the capital. And this is short-tailed business. The report card comes home rather quickly, so stay tuned.

It's helpful. And my follow-up is just on Chubb's digital transformation. You gave us an update back in December, but you've been talking about digital transformation for many, many years, probably much longer than peers. Just curious, as your views change in recent months, given advances in technology on the pace of the cadence of the digital transformation, front-end loaded, back-end loaded, or just right over time, and also just do you feel that your digital transformation goals, since they're longer term, could change fairly materially over time, given the pace of change in technology? Thanks.

I haven't changed my view of our goals in the last three months, and it is steady, and we are executing, and we are on track. The technology is evolving at a rapid pace, and the most interesting in the last number of months that will, frankly, is still emerging. There's a lot of talk about it, but how it actually operationalizes is the notion of what Agentex now really brings and the notion of enterprise solutions that some of the developers of frontier large language models are working to actually monetize all that they've spent in development. And I think those trends, as they emerge, will only accelerate, improve, lower costs, make it easier. So, you know, I'll stop right there. It's an exciting time. and um you have to spend and i spend much more time on this subject than i did you know even two years ago or a year ago um you need to have knowledge you can't just be listening to others you got to have firsthand knowledge and um and and and and otherwise you yourself start to become irrelevant so as a leader all that's on my mind your next question comes from line of

gregory peters of raymond james your line is open well good morning everyone um so you know uh ask a follow-up question to the you know some of your comments you just made um and some of your shareholders have reached out to me and specifically you know there's so much news in the marketplace about the rapid evolution of technology, specifically the new piece of information we're all processing is the Anthropics mythos. And I'm just curious of how you view this type of technology and its risks to the cyber insurance market, how you think it might affect contingent business interruption. And then, you know, these tech companies are rolling out this technology, and if it causes problems, I'm sure they're going to face some liability costs. So just trying to come at it from a slightly different angle, but anyways, your views would be appreciated.

Sure, Greg. And that's not a slightly different angle. That's a different angle, and it's the right question. You know, first, just on mythos, and it's the notion of finding vulnerabilities, and we've redefined vulnerabilities, the threshold for vulnerability has been lowered. What were minor vulnerabilities can now be aggregated in a much more insightful way. um anthropic is a code generator so it can read code so it's it shouldn't be shocking that since it can read code look what it's look at another use that has emerged um and then there are others think think gemini's models um and they're and and google and the company's business model They go and they do searches for information. That means they know systems, computers. They know how to access. The system does. So, frankly, it can look at code. Finding vulnerabilities right now is not just, and just on level setting. It's not just that you can use this to find your own vulnerabilities. But many companies, most companies also use open source in their estates. And so third party. And to the degree it's open source that way in the estate, you can find vulnerabilities, maybe even before suppliers do. Doesn't mean the patch has been created. So in a word, the arms race is on. Now it is about hygiene and services to monitor and to support clients and identifying and fixing. And clearly, how diligent are you? Do you identify and patch? And imagine now, the tools to patch are more automated, and that automation is improving quickly. So you can patch faster. You can identify, you can patch if you choose to, so you have faster speed. So that's the defense side of it, while we know the offense side is just around the corner. By the way, from what we can tell so far, in AI, in cyber attacks using AI, there really is only one instance we're aware of so far where it didn't involve a human. Other than that, humans are in the cockpit when they're using Agentex so far. From an underwriter's point of view, obviously policy conditions and pricing are on our minds. Large account will be much better at hygiene and have much stronger perimeters to get through, to penetrate than small companies. Small companies, on the other hand, are less target individually, but create more systemic concern. And then finally, the biggest meatball there is middle market companies. They're a target. They got more money. And they're less capable at hygiene and focus on it less and defense. And so all of that is on our mind. And they have weaker perimeters. All that is on our minds as underwriters. And I give you all this so you have a sense that we're thoughtful about this.

Thank you. That's good detail. For my follow up question, I'm going to I'm just going to focus on, you know, if you look at the PC consolidated operations, you're generating the first quarter and 84 combined ratio. You're on track to have a heck of a year. How do you think, broadly speaking, about the new business penalty, the fact that writing new business could be diluted to that 84 combined ratio versus retention? So just walk us through your mental model on some of the points in that.

Well, we run in our various businesses, call it 85 and north of retention. Large account E&S, the property I talked about, is where we're, you know, well, we shed half the volume. And by the way, that half the volume we shed, most of it was because we walked away. we also purchased additional reinsurance that impacted our premium growth and and reduced our exposure um um but we always have a new the new business quote unquote penalty so i don't see i'm thinking about what you're saying and i don't really see much of an impact um i don't see any impact um frankly and when i'm maintaining underwriting discipline and property if anything what i'm doing is ameliorating um impacts to combine ratio um in our minds because we're only shedding business it is woefully and adequately priced if we were to write it thank you for your answers your next question comes from the line of meyer shields of kbw Your line is open.

Great. Thanks so much, and good morning. I guess one modeling question to start with. Obviously, you called out the savings-oriented single premiums in life insurance in terms of written premiums, and we saw a similar, I guess, uptick in policy benefits. Does that stay elevated in future quarters also if the sales of these products normalizes or goes back to what it was before?

Do you want to take that offline or do you want to ask?

Yeah, I'll just do it real quick. So the savings-oriented products, as you know, are more spread-based than underwriting margin-based, and that's how you have to think about it. And so, if you will, if we're selling elevated amounts of premium, there'll be a policy benefit that would match it. but over time, the margin comes through the investment product.

And I don't just understand it's Asia. And first quarter in Asia, classically, an agency business, very fast start. I don't expect to see this kind of growth continue in single premium business. return on capital for it is brilliant. I'm not in love with the margin of it, but I'll tell you what, it's like mutual fund business. You write a lot of it and you make some money. But I expect more of growth in regular premium and risk-based product as we go forward in the year.

Okay, fantastic. That's very helpful. And if I can sort of switch gears back to AI, one of the debates out there right now is whether if the insurance brokers collectively use AI to lower their own expenses or expand their margins, does that provide an opportunity for companies like Chubb to reduce acquisition expenses?

Pick your moment, and at the right moment, it does. I mean, ultimately, ultimately, I have to tell you, and, you know, I have been in this business a long time, and this industry has certain idiosyncrasies about it, and there's a belief that, therefore, these things will be durable, like the cost of intermediation. The cost of intermediation in many parts of the industry, and this is not a slam against brokers, there are partners, but the intermediation costs overall in numerous parts of the business are excessive. And in an age of digitalization, in an age of AI, what technology does, one of the hallmarks of that is that it ought ultimately and it will in so many areas bring down cost. And if you look at the economics of the business and the cost of intermediation, I think in the longer term, it will and should decline. Okay, thank you very much.

Your next question comes from the line of Tracy Benghigi of Wolf Research. Your line is open. Good morning, Tracy.

Hey, good morning. My question is for Tim Burroughs. There's been a noticeable change in tone by the market around private credit recently. From your perspective, has that influenced how you're thinking about the role of private credit to play in your portfolio going forward? And if you could also touch on the health of the existing book, particularly any trends you may be seeing in underlying borrower performance or early signs of stress.

Good morning, Tracy. Yeah, sure. On our private credit, our exposure to private credit is less than 4% of total investments, and just over 50% of that total is in direct lending, consisting of first lien, senior secured loans that are at the top of the capital structure. This portfolio is in separately managed accounts, and I think that that's important, not BDCs, where we have control of deployment and enforce conservative guidelines to our managers. While the direct lending sector has grown rapidly, as you know, in the last few years, we've remained disciplined and have not grown our allocation. Our small group of experienced managers has consistently delivered strong, conservative results with a loss experience we estimate to be only one-third of the broader direct lending universe. This discipline is further evident in our very modest exposure to software, which at less than $150 million or 4% of the direct lending portfolio is a fraction of the 20% average across the sector and less than a quarter percent of our total investment portfolio.

That's super helpful. I'd love to get your thoughts on how you're thinking about the duration of this soft cycle. Does that steep pace of property pricing decline suggest something shorter-lived, maybe less sustainable, or do the structural and capital factors you discussed with Mike point to a longer soft cycle? And if you could also touch on if you've seen any deterioration on terms and conditions that may play into the duration of this soft cycle?

Yeah, terms and conditions, just on the margin. Not zero, but on the margin. And as to duration, well, look, I don't know. What I do know is you underprice business in property, And I haven't noticed that the attritional loss environment, property premium, property pricing is made up of two things. Attritional loss, so you got price to support attritional loss and premium, and then you got cap. I haven't noticed a diminution in the attritional loss environment. That's pretty steady and, you know, it has a little volatility to it because of the size losses, but pretty darn steady. And on the cat side, well, unless you believe that the models are wrong, or that somehow the climate environment is going to change or has changed, and is going to become something other than what it has been, then we have inadequate pricing. And inadequate pricing in property tends to reveal itself pretty quickly. And the only way out for capital providers at that point is to adjust pricing and to ensure they got the right terms and conditions. And so generally, in my mind, you go to a dumb place pretty quick, then the reaction the other way ought to be quicker. But you know what? I don't know with certainty. But that's kind of my mental model.

Thank you. Very helpful.

Next question comes from the line of David McMadden of Evercore. Your line is open.

Hey, thanks. Good morning. I had another market question for North America Commercial. Notice that the casualty pricing has held in pretty well here and actually accelerated a little bit this quarter. I get that it's nuanced, but as property returns come under pressure, you expect to see increased competitive behavior shifting into casualty? Are you seeing any early signs of that? Just sort of wondering your outlook there.

No. So far, the pattern in pricing is about what I observed to you in prior quarters. In the cohorts that need price, you're getting price in excess of loss cost. And where the pricing is adequate, it is generally flat to, or in some instances, below loss cost increases. But I see it at this point, as I look through the stack, as pretty rational. Not everywhere, of course. You know, it's a market. But overall, I do. And I even have been surprised in certain areas where the market response has been the correct response and it creates more opportunity where rate adequacy is required and the market is respected.

Got it. Thanks. That's encouraging there. Um, maybe just switching gears, uh, the, the Chubb worksite benefits, um, the 16% growth there, that's, that's pretty solid. I think, especially after similar growth last year, um, could you just talk a little bit about the strategic role of the, the worksite benefits business within the broader portfolio and how you're thinking about the key building blocks, uh, to scale it from here, whether that's distribution, product expansion, or maybe even potentially M&A?

Yeah, there's no M&A in there on the horizon. As we see, we've built it organically, and we're continuing to. It's fundamentally part of our accident and health strategy. We pursue it in two ways. We have the legacy agency force of combined that we have retooled to not sell individual insurance, but small worksite benefits business. And it is predominantly supplemental A&H business that you know us for, dread disease, hospital cash, et cetera, to really lower middle income to middle income people and provides a supplemental product to them. It's the same, but with a different distribution for larger account, middle market, upper middle market to large jumbo now where we're awarded business. And it works very closely with our PNC distribution and our PNC distribution and the brokers who represent us that way, they have expanded greatly over the years into employee benefits. And the notion that you couldn't cross sell one to the other is an old myth, because in In fact, the relationships and the accounts, we are benefiting from that in the growth of Chubb worksite benefits, and it again is a similar product mix with maybe a bit more of term life built into it as well. It's risk-based products. When I look at, and it's on life paper, so when you look at the broader story of our life business and you look at our international life business, which, as I've told you, is over two-thirds risk-based supplemental A&H type business growing through agency distribution, digital distribution, banks, et cetera, and has as well savings and other protection products within it. It's just part of a coherent story of what we are pursuing between accident and health and life, which both are growth areas for the company.

Got it. That's helpful. Thank you.

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

Hey, thanks. First one I have to use on the Middle East conflict. Can you talk about your involvement in some of the solutions that are being contemplated for marine and trade credit and so forth, and to what degree that can support some growth near-term? And to what degree what? It can just help with, I guess, a growth opportunity.

I was approached by our government to put together the program that you have read about that we announced. The government wanted to support shipping through the Gulf and open up when they think that the risk environment is such that they can support with military convoys ships that would transit the Gulf. And that has yet to occur. The program is to ensure shipping under those conditions. And the purchase of our insurance program is a condition to being part of a convoy that the U.S. would run, the U.S. military would run. The program is supported by U.S. insurers, taking 50% of the risk, and the other half of the risk is taken by an arm of the federal government. We have done it, number one, to support our country and to support our military. Number two, to support the global commons and the economy to the degree that we, practicing our craft, can provide that service. And, you know, it's in place. And when conditions are such, if they are, then, you know, this will obviously generate, would potentially generate premium revenue. And, you know, stay tuned.

That's all helpful. Second one I had is on your partnership with KKR and some of the funds that you were putting together. And I just wanted to check in on the timing of it, when some of those newer things you've been working on are going to potentially contribute to NII or if they're already contributing to NII. I just wasn't clear. Um, and, and I guess related to that, you know, had some of the AI disruption changed anything about, you know, timing of all of that and the work you're doing?

Yeah, I think you're, you're missing something. Um, we have disclosed quite clearly, um, particularly the last at the investor dinner and in quarters before, um, you know, quite a bit of detail about, um, our alternative assets and the investment activity there. What's our strategy? Half of it is called strategically. Describe what that is about. And by the way, about the income and the income we expected to produce a few years that we expect to achieve.

It's all out there, but we're happy to um it does show up at income statement yep understood thank you your next question comes from line of matthew heimerman of city your line is open hey good morning everybody um just one

just one on reinsurance i'm just curious should we think about if uh relative to any softening and pricing um relative to how you're thinking about rate adequacy just more opportunistic returns purchases on a go forward basis um or is it just this was so acute um particularly on the property side you felt compelled to do so can you just repeat that matt um we have something changing can you hear me i can hear you and i'm on i'm on uh a headset so No, we just gave ourselves a hand, but go ahead.

Can you repeat?

Just how to think about how likely additional opportunistic reinsurance purchases are, and I don't want to overreact to what you did in property because the declines were pretty significant, but just how likely, because I don't view you as an arbitrage reinsurance buyer but obviously it's available so just just trying to think about how you're you're thinking around risk management evolves vis-a-vis the reinsurance pricing spread and the follow-on really which i'm really more curious about is like where does this allow you if anywhere to take more risk um asset side etc yeah um i'm not really going there except to say to you

that um axiomatic in here when pricing um becomes marginal or or inadequate we have to manage exposure and our app not about did you hear that answer because we're having some audio problems you are clear to me um willing to willing to add anything just respect to if if uh shrinking risk appetite in places in you know proper response to market conditions does that create some flexibility to take more risk asset side are there any things from uh complexion change in the portfolio that influenced that no it it the way we run a business doesn't think we we don't think that we're not planning a capital and we maximize the amount of risk we take um based on how we judge risk reward and there's no trade-off one to the other i appreciate it thank you your next question

comes from line of brian meredith of ubs your line is open yeah thanks evan uh keep hearing a lot about price what's happening in the property markets um i wonder if you could talk about terms and conditions um you know hearing a little bit more about some softening terms and conditions from people are you seeing that and maybe you can maybe dive in a little bit because that can be kind of scary.

Welcome to the insurance. It's not scary. It just is what it always turns out to be. No. And there you go. And by the way, when we look at, by the way, change in BI waiting periods, deductibles, CBI, et cetera. No, we actually put- Terrific.

Thanks. Great. And then the second question is, I've heard a little bit from some other companies about admitted markets getting more competitive and taking business back from the E&S or wholesale non-admitted markets. Are you seeing that at this point?

I am on the margin of middle market and small commercial admitted, admitted much, much more discipline he asked less about on the incentive it's it's terribly illogical he admitted um it wouldn't surprise me to see more it's a classic pattern um in softening market um where i'm seeing it is more you know on the margin in the properties retail that'll solve a sudden get get so excited to write habitational wood-framed business. Good luck to you.

Thank you. We've run out of time for questions. This concludes today's Q&A session. I'll now pass the conference back over to Susan Spivak for closing remarks.

Thank you, everyone, for joining us today. If you have any follow-up questions, we will be around to take your calls. Enjoy the day, and thanks again.

This concludes today's conference call. You may now disconnect.