Chubb Ltd (CB) Q3 2026 Earnings Call Transcript

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 third 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 question, 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.

Thank you and welcome to our September 30th, 2026 third quarter earnings conference call. Our report today will contain forward-looking statements including statements relating to the company's performance, pricing and business mix, growth opportunities, and economic and market conditions which are all 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. Then we will take your questions. Also with us to assist with your questions are several members of our management team, and now it is my pleasure to turn the call over to Evan.

Good morning. As you can see, we had a really strong quarter. Our sources and quality of earnings, starting with world-class underwriting margins, speak to Chubb's excellent competitive profile, including our geographic and business diversification, our growing invested asset, and an enduring culture of underwriting discipline, a hallmark of who we are. These distinguishing attributes have all contributed to a long record of sustainable and growing value creation. PNC underwriting investment and life income results led to core operating earnings of $2.98 billion, or a record $7.66 per share. That was down about 2% and up about 1% respectively due to exceptionally light cat losses last year. From a more meaningful perspective, looking to the first nine months of the year, core operating income was $8.6 billion, up 21% from the prior year, and core operating EPS was $2,194, up 24.5% from last year. Annualized core operating return on tangible equity was 21.6% for the quarter, and core operating ROE was 14.9%. For the quarter, PNC underwriting income of nearly $2.1 billion led to a combined ratio of 84.1. We had strong contributions from all of our businesses. Year-to-date, we have produced record underwriting income of $5.8 billion, up nearly 34%. Our global P&C XCAT combined ratio was a world-class 81.8 percent, essentially flat with the prior year, and included a reduction in our loss ratio and our admin ratio, offset by an increase in acquisition ratio. This speaks to our increasing efficiencies and mix of business. On the investment side of our business, adjusted net investment income was a record $1.89 billion, supported by a materially improved fixed income investment environment and record cash flows. Fixed income-related exposure is 88% of our invested asset, and equity-related is 12%. Our current and future operating income benefits from a rising interest rate environment, which we have expected for some time, given growing fiscal deficits, inflation, and the public and private sector competition for money. We position ourselves with that in mind by maintaining a moderate duration and a conservative approach to credit quality. We are a buy-and-hold investor of a high-quality investment-grade portfolio. Rising rates produced a third-quarter mark of $4.5 billion in net realized and unrealized losses. Given our duration and higher reinvestment rates, the mark will amortize away reasonably quickly. It is ephemeral. The third quarter fixed income portfolio yield was 5.2 percent and our current new money rate averages 6.2 percent as of September 30th. On the alternative asset side, as was publicly announced in the quarter, strategic holdings in our holding company partnership with KKR agreed to sell our investment in USI insurance services to Aon. This is expected to result in a realized gain of $460 million on an investment of $740 million. Our invested asset stands at over $175 billion, up from $168 billion a year ago. Life income of $369 million this quarter was up about 11.5% from last year. Year-to-date, life income is just over $1 billion, up over 9% from a year earlier. Peter's going to have more to say about financial items. Now, turning to underwriting, pricing, and growth. The substantial majority of our businesses are growing, with the balance flat or purposely shrinking due to inadequate pricing or terms. There's nothing new there. In the quarter, we again shed more property and financial alliance exposure, which affected growth. The most visible example, again, is in the U.S. North America middle and small commercial grew in the quarter, as did North America personal lines in agriculture. Overseas general had good growth across all major regions, both consumer and commercial, particularly middle and small commercial, while North America E&S in major accounts shrank. This pattern of growth, again, speaks to the breadth of our business and our diversified sources of growth and opportunity globally. While total PNC premiums were up 1.9%, overseas general grew 6.7%. North America personal lines was up 5.3%, and agriculture was up over 5. Agriculture was a meaningful contributor to growth this quarter. North America commercial was down 2.7%, impacted again by large account and E&S property and financial lines, where we non-renewed certain business and purchased additional reinsurance. The adverse impact on growth was about 4.5 points. And with that said, I fully expect North America commercial growth to improve materially in future quarters. In terms of pricing, the market continues to grow more competitive in commercial PNC across the globe, in particular the U.S. and London. Beyond property, competitive market conditions are spreading to more casualty lines, where pricing in numerous areas is failing to keep pace with loss costs, which, while steady, continue to well outpace general inflation. There is a lot of hungry and extremely naive capacity available. Our broad diversification, including a deep local presence in so many countries and lines of business, leave us relatively well positioned with many areas of opportunity. With that as a baseline, I'm going to give you more color on the quarter by division and region. In international PNC, a $17 billion business, our consumer-related businesses, both A&H and personal lines, were up 7.2 percent, and commercial was up 6.3. Latin America grew 11.7. Asia grew 7.5 percent, and Europe grew almost 7. In our London wholesale business, which is about 10% of international PNC, premiums were up 13.5% for the quarter, benefiting in particular from our Gulf War marine-related activities. Turning back to North America, premiums in our $10 billion middle market and small commercial division grew about 1%, with P&C lines up 2.6, or 4%, adjusting for a smaller annual workers' comp-related premium adjustment than we had last year. and middle market financial lines was down 5.9% or up about 1.8 adjusted for exposure change from additional use of reinsurance and non-renewal of inadequately priced business. In our $16 billion major accounts and specialty division, premiums declined 5% and adjusting for property were up about 1%. Gross premium pricing in North America for commercial property was down 4.2%. Casualty was up 5.7, and financial lines was up 2.1. Going a step further, for the business we wrote, property pricing was down 11% in shared and later major and specialty, and up a little over a half a percent in mid and small. On the consumer side of North America, our nearly $8.5 billion high net worth personal lines business, a clear market leader in that category, had another really good quarter, with premium growth of almost 5.5%. Our combined ratio was 60.3, which speaks to the strength of our risk selection, underwriting, and sophistication in pricing, and of course, a lighter than average quarter for cats. In our international life insurance business, premiums and deposits rose over 15 and a half percent. The vast majority of our life exposure, as you know, is in Asia, and the majority of growth is coming in North Asia, meaning China, Hong Kong, Korea, and Taiwan, though I'd like to call out Thailand as well this quarter. Premiums in our North America Chubb worksite benefits business were up over 11 and a half percent. Our international life Division produced $277 million of pre-tax income in the quarter, up 7 percent from last year, with income up almost 11 percent year-to-date. In sum, our global diversification, our presence and capabilities globally, our large and growing invested asset, along with rising interest rates, and our operating discipline provide us with strong margins, continued growth opportunities, and sustainability of value creation. We are a consistent compounder of wealth and an all-weather firm with many sources of opportunity on both the liability and asset side of the balance sheet, and we are patient cats and fx aside as i look out over the medium term i am confident in our ability to continue to outperform and to generate strong growth in operating earnings and eps and most important double digit growth and tangible book value now i'm gonna turn the call back over to peter and then we're going to come back and we're going to take your questions uh thank you

To Evan and good morning. Our third quarter results were driven by strong underlying business performance and continued strength in our investment results. We continue to effectively manage our balance sheet and remain in a financially strong position with book value of 73 billion and excellent liquidity as evidenced by a record 12.8 billion in adjusted operating cash flow over the last nine months. During the quarter, we issued approximately 400 million Swiss francs of debt at a weighted average cost of 1.1% in an average term of five years. The use of proceeds is for general corporate purposes, which includes the repayment and refinancing of debt. For the quarter, we returned 1.6 billion of capital to shareholders, including 1.2 billion in share repurchases at an average price of $344.32 and $393 million in dividends. For the first nine months, we have returned about $4.5 billion of capital to shareholders. Book and tangible book value per share excluding AOCI grew 2.6% and 3.5% respectively for the quarter. Intangible book value per share adjusting for AOCI was up 15.4% from the prior year. Pre-tax catastrophe losses were $705 million for the quarter, principally from a variety of weather-related events globally and an earthquake in Latin America. Cat losses were $1.7 billion through nine months versus $2.6 billion over the same period last year. Pre-tax prior period development in the quarter interactive companies was favorable $562 million, comprising $575 million of favorable development in short-tail lines and $13 million of unfavorable development in long-tail lines. As you know, and Evan has said repeatedly, we are slow to recognize favorable development and quick to recognize unfavorable development. Our corporate runoff portfolio had adverse development of $51 million, predominantly environmental related. Overall, our loss reserves, which are now over $71 billion, are conservatively constructed and remain extremely strong. Our paid to incurred ratio for the quarter and year to date was 80% and 86% respectively. Our core operating effective tax rate was 19.9% for the quarter, which is near the top end of our previously guided range due to shifts in mix of income and the impact of discrete tax items. We continue to expect our core operating effective tax rate for the full year to be in the range of 19 and a half to 20 percent affected this quarter we have excluded the amortization of certain m a related intangible assets from our core operating income this change which has a de minimis impact on growth and roe better represents the true economics of past acquisitions and improves our comparability with peers globally all prior periods have been recast accordingly i'll now turn the call back over to Susan.

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

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're called upon to ask a question and you're listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking a question. We do request for today's session that you do restrict yourself to one question and one follow-up. Your first question comes from a line of Mayor Shields of KBW. Your line is open.

Great. Thanks so much, and good morning. Evan, I was hoping you can get a little bit more color on the increasing risk that you're transferring to reinsurers.

In what regard? So you mentioned that one of the headwinds to North America commercial growth was more reinsurance purchasing, and I was wondering which lines that's focused on. yeah it's um it's well as you know and and i i think we discussed it it's in financial lines um certain areas of financial lines and it's in um it's in property in both of those we um we took advantage of opportunities to place additional reinsurance which also gives us the opportunity to maintain presence and provide you know service and coverage to customers

and at the same time spread risk and it was in those two areas okay great that's helpful uh and second question we saw admin expenses actually down year over year again in North America commercial uh and I was hoping to get a sense as to whether there's anything unusual there or this is just technology-based efficiencies?

Yeah, you know, and let's put the lens beyond North America. Look at it globally. And I think that, you know, zoom out of a North American, just look at the company as a whole, North America included. Our operating expense ratio has been trending lower, continues to improve our digital transformation programs and other efficiencies are visibly appearing um you know and that's all around employing foundational tech and data and smart layer of technology algorithmic large language and agentic related and we're on track um in terms of the medium and longer term efficiencies and an improvement to our competitive profile, which goes beyond efficiencies that we have described in the past. And by the way, it's impacting underwriting, it's impacting marketing, claims, finance, sales, all areas of the company. And it's impacting broadly across the globe.

Thank you. Your next question comes in line of Matthew Heimerman of Citi. Your line is open.

Matthew Heimerman Hi, good morning, everybody. I guess, Evan, I'd appreciate your perspective on the current debate related to coverage for AI liability, which from my perspective seems quite nuanced, although the brokers seem to suggest the status quo is quite reasonable. So maybe more specifically, how to think about the utility of new standalone rates and forms versus simply incremental changes to language or sublimits in investing forms versus no changes at all?

Yeah. Thank you for that question. Look, AI liability, you know, it's all over the And the papers generally, it's emerging as a topic beyond the insurance industry. And AI liability is a growing and emerging exposure that is not contemplated in casualty underwriting really to date. And it needs to be understood, it needs to be managed, and it needs to be addressed. that's what we call underwriting and that's what the insurance company does in managing the risk i imagine you know we're going to have a combination of coverage clarifications ultimately exclusions and separate ai relay related liability coverages um this will all emerge along with underwriting and pricing to discern between risks. AI-related liability exposures will vary between insureds and type of insureds. And frankly, when you think beyond that, to assist business generally and add to greater certainty overall in the liability environment as it emerges, I can imagine a regimen around model certification standards emerging. I can imagine best practices in management and governance of AI and agentics emerging quickly and evolving from there. And these will be tools that will also assist in insurance underwriting. So, you know, while that's a mouthful, I think that gives you all the elements of how the industry will approach and address AI liability. As an industry, we have to put our arms around this.

And frankly, we've had to do this with emerging liabilities over the last 50 years. and there's a a pretty good template um thank you for that um there's a number of follow-ups i'd i'd love to explore on that but i think in the interest of time and other topics i wanted i i wonder uh you or peter can clarify just in the asia life um production this quarter was there anything either in the quarter or the prior quarter that was impacting the comps there And just relative to whatever you think the underlying expectation for us should be with, you know, historically it's been pretty strong production.

Yeah, in the third quarter, sorry, Peter, in the third quarter of 25, there was an acquisition of effectively a closed block of business in New Zealand. We disclosed that the impact I, the impact is approximately 8%. So the production really is more like 10.5% on a comparable basis for net written premium, which we think is more at a normal level. It was well over $100 million last year.

You know, it's very large. And we disclosed that.

Thank you. Your next question comes from the line of Brian Meredith of UBS. Your line is open.

Yeah, thank you. Evan, first question. I'm wondering if you could unpack your comments about the improving growth in North America commercial a little bit. Is it because the headwinds on property are going away, or are there really now emerging opportunities in the North American commercial business?

You know, I think it's a combination of both. The negative impact from the actions that we have taken will diminish. And areas of opportunity, the impact of those will increase. middle and small commercial in particular. But our advantages from product breadth, local geography, massive capabilities up and down the chain, you know, from largest companies to small business, and our data and technology and the power of it, that continues to emerge in spite of and, of course, in context of soft market. So, you know, I see it between diminishing headwinds and our own opportunities.

Great. Thanks. And then my follow-up question, I'm just curious, Evan, can we get your perspective on some of this alternative capital that continues to kind of come into the industry, particularly as it relates to, you know, casualty sidecars and some of these broker facilities? Is this something you see having an impact on market conditions here and going forward?

Well, of course, you know, there's a. What drives cycles, drive cycles and insurances supply demand. And so sidecars and broker facilities, blind follow facilities, more MGAs with capital behind them other than, you know, professional insurance and, frankly, a lot with professional insurance behind it. this is all you know throwing out of balance the supply relative to demand and it's a lot of very naive capacity and you know even even where it's other than traditional insurance it's investor capital there's two brands of it to me there's one brand where they're cleverly going to make a trade even in casualty sidecars. And they're going to try to pass, or they have it arranged to pass the tailback to the carrier that's fronting it, who's going to end up holding the trash. And they may make a turn. On the other hand, I think a lot of that clever capital doesn't understand the pricing versus the loss cost environment. And I don't think they're going to end up making the turn that they think they might make. But in a word, we've been living in a world where the cost of money is cheap, and there's a lot of money looking for absolute return, not risk adjusted. As you know, generally, the world is beginning to change that way. But in the meantime, a lot of it has found its way, or a fraction of it has found its way into insurance as sort of an alternative investment asset. It has different forms now than we've seen to some degree in the past, but the themes are the same.

Thank you. Your next question comes from the line of Bob Huang of Morgan Stanley. Your line is open.

Hi, good morning. I'd like to kind of unpack a little bit about your commentaries around overseas general insurance. Notice that several countries, when you called out, were in Asia for the quarter, specifically Thailand and such. Just given the prolonged conflict in Iran and just oil price volatility has been fairly long lasting so far, can you maybe help us think about your view on Asia opportunities and has that changed over the year so far in 2026? Just curious how you you think about the go forward there first?

Yeah. Bob, thank you. First of all, the countries that I cited, that was in the life business. I didn't cite countries in overseas general PNC.

Sorry. Yep.

But if I did, I would cite those plus even a larger number of countries. I just returned with my colleagues from two weeks in Asia. We were through Southeast Asia, China and Korea. So let me help you with your model. There are two regions of the world that are really growing right now, more exceptionally. That is North America, particularly the United States, and Asia. And when you look at the growth in Asia, Southeast Asia, Korea, Taiwan, A lot of it is tied to the U.S. capital investment sort of super cycle that we're in as we build out AI and AI-related infrastructure and invest to remake our economy that way. Asian countries are a beneficiary of that. They're all tied into the supply chain. um asia is is growing and i see sustainability you know it varies by country um but the dynamism that i see and the opportunity that presents for chubb's business rising middle class digitization um growth of small and mid-sized businesses i was in vietnam it's a beehive of development um thailand overall though it has its odian idiosyncrasies related to domestic credit and and maybe underperforms the region thailand is still very solid um singapore malaysia is growing well taiwan um our business in hong kong and china in spite of a soft domestic environment P and C in life is growing double digit. The Korean economy is growing between 3% and 4% right now, again, tied to the supply chain of the United States in particular. So I'm bullish on Asia right now, both medium and longer term and shorter term. Of course, it has a certain volatility signature to it. emerging markets do. But overall, our presence, our capabilities, the breadth of our business, the depth of it through countries, I'm very optimistic for Chubb in Asia.

I really appreciate that. Maybe just pivot a little bit. I know you kind of talk about cyber liabilities, but if we were to think about data center investments, data center constructions, AI build-out. Can you maybe help us talk about your exposure there, just maybe the thoughts on the risk maybe the insurance industry is taking on? Just curious your thoughts there, if possible. Thank you.

Well, let's unpack it a couple ways. Right now, in the cycle of data center development, particularly hyperscalers and medium-sized. We're more in the construction phase with the operation phase more in front of us than, you know, behind us. That's to come. A lot of projects announced, only, as you know, only a percentage of those are actually shoveling the ground right and delays due to you know a combination of things permitting energy labor supply chain etc but we we are quite active we're quite active in the in the physical property related construction we're active in marine surety it's a huge opportunity for us insurity we've written quite a bit and but but more important it's the pipeline of what's outstanding to bind because you don't really bind until the shovel goes in the ground and that's in front of us as i said with many projects that are delayed when you when you think about values and i think you're alluding to that in concentration of exposure we manage it technically no differently than we manage any other concentration of exposure we manage how much we could imagine that we'd have as a loss from a single event and we imagine that across perils so you know it's technical it's engineering and i'm comfortable with the way that chubb is approaching it thank you your next question comes by the way we're a leader across the board globally in data center development. We have the broadest capabilities.

Your next question comes from the line of Ryan Tunis of Cantor, your line is open.

Hey, thanks, good morning. So in North America commercial, Evan, there's been about a point of underlying loss ratio deterioration year to date. Is it fair to attribute that magnitude to the impact of pricing versus loss trend, or is there anything else going on there? no i wouldn't say that it's the reduction in property period so it's so there's a makeshift element and um that's all it is you've seen the reduction in property and so property as a percentage is down that's the whole loss ratio i guess relatedly this is the follow-up um overseas general we're not seeing a deterioration dynamic so far year to date so just uh curious on color

around the stability there just given the pricing environment well it's um there is no one pricing environment in overseas general overseas general is insurers the world you have it's throughout europe it's throughout the uk europe is more stable than the uk is um our growth in middle and small commercial business throughout the globe. Latin America goes to a different beat than Europe or the UK does. And it varies by country. And again, it's more middle and small commercial for us there. And then the same with Asia Pacific. And so that's one part of the story. But the other part of the story, which I think is more important, is the balance between consumer and commercial within Overseas General. Consumer is growing more quickly. The size of the consumer business relative to the commercial business. So large account is only a piece. And when you get to the consumer, when you get the balance, which most of overseas general and commercial is mid and small and then you get to the consumer side which is half the business it's accident and health which grew by the way globally our a and h business grew at about six percent this quarter it's personal lines overseas which is everything from automobile insurance in Mexico, where we're the number three writer, insuring over 2 million autos, to insuring cell phones and computers in Asia, and automobile in Thailand, and Malaysia, and homeowners and high net worth insurance in Australia and the UK. It's a variety of opportunities in a huge world out there where we have fabulous capability. it's our direct marketing business in asia and latin america we're the largest direct marketers of insurance digitally and by phone of consumer businesses up and down the chain as i explained it from lower middle income people to middle middle income your next question comes the line of Andrew Kliegerman of TD Cowan.

Your line is open.

Hey, good morning. High net worth personal lines, again, a spectacular quarter, premiums up over 5%, combined reported at 60. Any changes, Evan, in the competitive landscape with these types of returns, with AI coming into the picture? I mean, do you see these kinds of results as sustainable over the intermediate to long-term?

I do. High net worth is, and the business we do, it's not about the price you charge as much as it is about the richness of the coverage and the services. It's about the complexity of those coverages. It's really like selling a small commercial or middle-sized commercial account in the management of it. This is not something you buy over the internet or some agentic shops for you for insurance. this is far more bespoke and it is a trust business it is an agent driven business and relationship business between the customer and us this is not a trade these are our our customers so i start with that yes there are always cyclical competitive pressures that emerge because cat reinsurance becomes cheaper per risk insurance becomes cheaper excuse me and so competitors may employ more of that to um chase business at a cheaper price on the margin but but overall i see steady as she goes with some variability now and again and that's it Got it.

And then just moving over to reserve adequacy and prior year development was also spectacular. But in the long-term lines, I think Peter called out 13 million adverse. Could you share with us any color on the, say, 21 to 25 accident years and, you know, just your general confidence going forward and longer tail lines and how adequate those reserves are?

Yeah. And thank you for that question. Look, as Peter said, you know, I've repeated it ad nauseum. We're slow over the years. were slow to recognize favorable development, but very quick to recognize adverse casualty underwriting is not for optimists. And as you know, the stinger is in the tail in development. them um the more recent accident years um while they may be developing more favorably we we they're green we we wouldn't touch them um while the development that we did see was in more older accident years and think more 19 to 22. and by the way the amount was reasonably modest when I look at our overall reserves as a percentage, it was very small. I think that maybe gives you the kind of color here.

Your next question comes from line of Tracy Benjigi of Wolf Research. Your line is open.

Morning. The market yield rose to 6.2% from 5.5% in June, and you presented your duration in five years, 4.8 years, so that's remarkable. I'm wondering what your expectations are on adjusted net investment income going forward. I thought I would ask, since this is the second quarter, we stop getting guide for that, thanks.

And Tracy, it's Peter, and as you just said, we're not providing specific guidance. The way I frame it is, the reinvestment environment, as Evan said in his speech, is much more attractive. When you look at this quarter's results, how I'd frame it as we had extremely strong performance of fixed income related net investment income and alternative, in particular, PE was actually less than what might be normal. And as you know, it's very, very volatile, that specific asset class. And so over time, we're confident that will continue to return well. So with that as a backdrop, I think you can have a perspective around certainly the fixed income piece of this continuing to grow.

Thank you. Maybe just a quick follow-up. I know Brian had touched on this in the beginning of the questions about the North American commercial growth, improving materially in future quarters, but maybe you could just unpack the glide path there, wondering how much of the finishing line you've reached in terms of the underwriting actions you're taking in financial lines and large account property. Thank you.

Nice try, Tracy. I gave as much as I'm going to give on that.

Thank you. Your next question comes in line of Gregory Peters of Raymond James. Your line is open.

Good morning, everyone. So, stepping back to the technology piece, you know, it seems like with some rising frequency, we keep hearing about security protocols being violated, breaching of data security, etc. You know, you're managing a global enterprise. Your data assets are unique and special to your company. Maybe you could just give us some perspective on how you're managing the data securities, large language models, and these other tools, you know, are out there, and how are you protecting your data assets?

Yeah. You know, look, we're employing all of the best practices around governance and management of not simply our data, but the tools that we employ at the smart layer, which is... algorithmic but more to the point large language model and agentics and how we control and limit what they can do where they can do it how they can do it how we instruct for it and then protecting our own perimeter and multiple layers of detection and defense against third-party or external use of agentics and AI that could imperil Chubb's own data or systems. We invest significantly in this. We pay very close attention to it. It's fundamental to how we think. And by the way, and to give you a sense, it's evolved over a long period of time. Think about actuarial models. Before AI, we've always had to employ model management for a regulatory point of view. and for our own use to create governance and management over the efficacy of those models, traditional math. As those evolve past algorithmic and to AI-related, we have used the same template and the same governance processes. We've improved the tools, we've improved the techniques that we use, and the automation and humans in the loop to manage all of that. And it continues the harnesses and our ability to provide instruction precisely all continues to evolve.

Um, you know, I, I guess, you know, it's kind of building on the comments you've made. Um, but you know, as I, I think about everything that's going on and, you know, the, the new money rates jumping up over a hundred basis points from where you were, where it currently is in your book yield. And it, I just, you know, you, you mentioned naive capital, you know, there's these facilities, there's these casualty sidecars. Do you think it's possible that we could be, you know, pivoting to, you know, an environment where we're sort of cashflow underwriting on casualty and longer-term liability business, considering that there's these inflationary pressures and higher interest rates?

I think only on the margin.

When I look at lost cost inflation versus new money rates, and i look at pricing it doesn't it's not hard for me to work out the math um you're not cash flow underwriting at a 10 or 12 percent interest rate thank you your next question comes to the line of david madden of evercore isi your line is open hey thanks good morning um just a question uh on north america commercial so evan you've you've talked a bit um this call and in the the cues just on how the property growth or the mixed change from property is driving the margin or the loss ratio deterioration there. I guess with that drag, I guess, abating a little bit, how should we think about the margin trajectory from here?

I don't give guidance on margins, but I feel very good about our margins. And I feel, as you saw in the commentary, our sustainability of value creation, which includes margin, I feel very good about it. But I'm not going to give you more than that, David.

Yeah, worth a shot.

And by the way, you would be well served, as others would, not to simply over-obsess about North America commercial and consider all of that in the round as one company and then imagine all the handles to pull.

Yep. No, no, I hear you on that. Maybe just just following up here, you know, the growth has moderated a bit just for the company overall, still solid, but it has slowed a bit. You know, capital return, if I look at it, it's, you know, unchanged year-on-year roughly, at least on the buyback. How are you thinking about capital allocation here, just given the current market environment?

Peter is going to answer a part of that, and then I'm going to come back and actually answer it, probably another part.

David, we've been pretty consistent around preserving capital for risk and opportunity. If you look back over the last while, and it hasn't really changed this year, you saw our buyback ticked up this quarter. We've been returning in the range of half, 50%, and that's not a rule we have. It's an outcome. But look, we look at the investment environment and think it's really, really strong. And so we think about our capital in terms of return to shareholder. We also think about how we can deploy it in our insurance business, and in particular right now in our investment business, which includes both the current of course fixed income environment as well as our all strategy which is very differentiated i think that's said at all thank you you're next we're getting paid and i want to add this we're getting paid um um to hold the capital and um and money doesn't burn a hole in our pocket.

And there is no event on the horizon related to acquisition or any of that that we know is speculated. We actually enjoy the invested asset and the growth of it and the accretion to shareholder value that it produces. It is a major part of our business, is our investment business.

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

Hey, good morning. I have one on casualty. It says we're seeing casualty pricing come under a little bit more pressure, and I think maybe for a few quarters it's been under a lost cost trend. Any specific actions that may need to be taken there? I'm just trying to understand if we need to consider that in the context of some of the growth discussion from earlier.

We're underwriters. We write up and down the chain, large companies to small companies, all kinds of industries, all kinds of casualty, from primary to access to professional to construction. to more types of casualty for more types of industries and more geographies than you probably can imagine. And as underwriters, we're conscious of the risk environment, of the loss cost environment, which we then match to terms and pricing, and we're nimble.

I think that probably answers your question i'm not sure what you're asking me beyond that yeah no that's helpful thanks thanks for that uh second question also growth related i you know i heard you the comments on on small commercial and that continuing to be a good growth focus for you yeah um could you give us a taste of some of the things you're doing you know whether it's you know expansion of distribution? Any taste of all of that growth?

Yeah. It's small commercial. It's lower middle market. It's middle market. A combination of a very local geographic reach within countries because that's how it's done, whether it is in North America or frankly, it's in Malaysia. um it's the breadth of product it's our industry practices which is a real secret sauce for job um where coverages and and and and the the amalgamation of coverages are tailored for different industries to their specific needs to industry experts that we have that represent those industries. So that plus technology, the amount of data that we have that give us insight into risk selection and pricing, and then the technology to enable the local reach in relationship and a compelling proposition to both, quote it quickly, issue it with few questions, service it quickly, match to the human-to-human of agent-to-company relationship on a local basis, that is who Chubb is. And the opportunity in that and the scale advantages that we have that give us for data and for know-how that we can spread around from, whether it's the west coast of the United States to the southwest of the United States, or spreading from Asia to Europe, or United States to Europe. Our ability to do that and the scale advantage to invest in technology and use data to inform broadly, that is a hallmark advantage for CHUB that is enduring.

Thank you. That's all the time that we have today for questions. I will now pass it back over to Susan 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 once again, thank you. Bye-bye.

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