Chubb Q2 2021 Earnings Call Transcript

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Provided by Quartr
July 27, 2021

There are 11 speakers on the call.

Operator

Good day, and welcome to the Chubb Limited Second Quarter 2021 Earnings Conference Call. Today's conference is being recorded. All lines will be in a listen only mode. Following the presentation, the lines will be open for questions. For opening remarks and introductions, I would like to turn the conference over to Karen Beyer, Senior Vice President of Investor Relations.

Operator

Please go ahead.

Speaker 1

Good morning, everyone, and welcome to our June 30, 2021, Q2 earnings conference call. Our report today will contain forward looking statements, including statements relating to company's 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 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.

Speaker 1

First, we have Evan Greenberg, Chairman and Chief Executive Officer followed by Peter Ents, 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.

Speaker 2

Good morning. As you saw from the numbers, Chubb had an standing quarter, highlighted by record operating earnings and underwriting results, expanded margins Robust Commercial P&C Rate Movement. Chubb was built for these conditions. We have averaged double digit commercial P and C growth over the past 10 quarters. The breadth of our product and reach enable us to fully capitalize on opportunity globally.

Speaker 2

In conditions such as these, size and scale are our friend. Core operating income in the quarter was $1,620,000,003.62 per share, again both records. On both a reported and current accident year ex cat basis, underwriting results in the quarter were simply world class. The published P and C combined ratio was 85.5 and current accident year was 85.4% compared to 87.4% prior year. The 2 percentage points of margin improvement were almost entirely loss ratio related.

Speaker 2

Current accident year underwriting income of $1,200,000,000 was up 27%. While on the other side of the balance sheet, adjusted net investment income of $945,000,000 also a record, was up nearly 9.5% from prior year. Turning to growth and the rate environment. P and C premiums were up 15.5% globally with commercial premiums, excluding agriculture, up nearly 21%. The 15.5% growth for the quarter and 12.6 extremely broad based with contributions from virtually all commercial P and C businesses globally, from those serving large companies to Midsized and Small and Most Regions of the World and Distribution Channels.

Speaker 2

We continue to a needed and robust commercial P and C pricing environment in most all important regions of the world with continued year on year improvement in rate to exposure on the business we wrote, both New and Renewal. Based on what we see today, I'm confident these conditions will continue. In North America, commercial P and C net premiums grew over 16%. New business was up 24% and renewal retention remains strong at 96.5% on a premium basis. In our North America Major Accounts and Specialty Commercial Business, net premiums grew over 13%.

Speaker 2

With each division, major accounts, Westchester and Bermuda having its largest quarter in history in terms of written business. And the standout was our middle market and small commercial division, which had its biggest quarter in about 20 years, driven by record new business growth and strong retentions. Overall rates increased in North America commercial by a strong 13.5%, which is on top of a 14.7% rate increase last year for the same business, making the 2 year cumulative increase over 30%. And remember, in North America, rates have been rising 4 years. However, they have exceeded loss costs for only about 2 years now.

Speaker 2

Loss costs are currently trending about 5.5% and vary up or down depending upon line of business. General commercial lines loss costs for short tail classes are trending around 4%, While long tail loss costs excluding comp are trending about 6%. Let me give you a better sense of the rate increase movement by division and line in North America. In major accounts, rates increased in the quarter by about 16% on top of almost 18% prior year for the same business, making the 2 year cumulative increase over 36%. Risk management related primary casualty rates were up almost 9%.

Speaker 2

General casualty rates were up 27% and varied by category of casualty. Property rates were up nearly 12% and financial lines rates were up almost 20%. In our E and S Wholesale business, The cumulative 2 year rate increase was 39%, comprised of an increase of circa 18% this quarter on top of 18% prior year Q2. Property rates were up about 16 point Casualty was up about 21% and financial lines rates were up over 21%. In our middle market business, Rates increased in the quarter over 9.5% on top of over 9% last year, making the 2 year cumulative increase 20%.

Speaker 2

Rates for property were up over 10.5%, casualty rates were up 11%, excluding workers' comp and comp rates were down at about 0.5%. Financial lines rates were up over 17.5% in our middle market business. Turning to our international general insurance operations. Commercial P and C premiums grew an astonishing 33% on a published basis with 24% in constant dollars. International Retail Commercial grew 27 percent.

Speaker 2

And our London wholesale business grew 60%. Retail commercial P and C growth varied by region with premiums up 36.5% in our European division, with equally strong growth in both the UK and on the continent. Asia Pacific was up over 29%, while our Latin America Commercial Lines business grew over 14.5%. Internationally, like in the U. S, in those markets where we grew, we continue to achieve improved rate to exposure across our commercial portfolio.

Speaker 2

In our international retail commercial P and C The 2 year cumulative rate increase was 35%, comprised of increases this quarter and prior year of 16% each. 2 territories in particular, the UK and Australia stand out in terms of rate achievement. In our U. K. Business, rates increased in the quarter by 18% on top of a 26% rate increase prior year for the same business, making the 2 year cumulative increase 48%.

Speaker 2

In Australia, the 2 year cumulative rate was 42 percent comprised of an increase of 23% this quarter on top of 16% prior year. In our London wholesale business, rates increased in the quarter by 13% on top of a 20% rate increase prior year, So making the 2 year cumulative 36%. International markets began firming later than the U. S. And again, like with the U.

Speaker 2

S, rates have exceeded loss costs for about 2 years now. Outside the U. S, loss costs Consumer lines growth globally in the quarter continued to recover from the pandemic's effects on consumer related activities. Our international consumer business grew 13% in the quarter and that's on a published basis. It grew 5% in constant dollars.

Speaker 2

Breaking that down for you, international personal lines grew 20% on a published basis, while our international A and H grew 6.5%, but it was essentially flat in constant dollar. Within our A and H book, a nascent recovery in our leisure travel business outside of Asia is beginning to result in growth. Although passenger travel activity is still well below pre pandemic levels, in both our Group A and H business With its employer based benefits and our consumer focused direct marketing business, premiums were up mid single digits, still impacted by the pandemic, but beginning to improve. Net premiums in our North America high network personal lines business We're up over 2.5%. Non renewals in California and COVID auto related renewal credits had almost a point of negative impact on growth in the quarter.

Speaker 2

Our TrueNye network client segment, the heart of our business, grew almost 8% in the quarter. Overall retention remained strong at over 94% And we achieved positive pricing, which includes rate and exposure of 13% in our homeowners portfolio. Loss cost inflation in homeowners is currently running about 11%. Lastly, In our Asia Focused International Life Insurance Business, net premiums plus deposits were up 55% in quarter. While net premiums in our global Re business grew over 32%.

Speaker 2

In sum, we continue to Capitalize on a hard or firming market for commercial P and C in most areas of the world. Both growth and margin expansion are 2 trends that I am confident will continue. Our organization is firing on all We're growing our business and our exposures, and we continue to expand our margins. Our leadership and employees are energized and Driven to Win. I couldn't be more proud or humbled by the results they are producing and I want to thank them all publicly for their efforts.

Speaker 2

I am confident in our ability to outperform and deliver strong sustainable shareholder value. I'll now turn the call over to Peter.

Speaker 3

Thank you, Evan, and good morning. First, I'd like to acknowledge Phil Bancroft's Almost 20 years of service and leadership with the company. I'm excited to be in my new position and build upon all that he has achieved under his leadership, and honored to be leading the very strong team he has built going forward. Turning to our results. We completed the quarter in an financial position and continue to build upon our balance sheet strength.

Speaker 3

We have over 75,000,000,000 Capital and AA rated portfolio of cash and invested assets that now exceeds 123,000,000,000 Our record underwriting and investment performance produced strong positive operating cash flow of $3,100,000,000 for the quarter. Among the capital related actions in the quarter, we returned $2,300,000,000 to shareholders, including $1,900,000,000 in share repurchases and $352,000,000 in dividends. Through the 6 months ended June 30, we returned 3,100,000,000 including $2,400,000,000 in share repurchases and dividends of $704,000,000 We recently announced a one time incremental share repurchase program of up to $5,000,000,000 through June 2022. As Evan said, adjusted pre net investment income for the quarter was a record $945,000,000 higher than our estimated range benefiting from increased corporate on call activity and Haier Private Equity Distributions. We increased the size of our investment portfolio by 2.4 $1,000,000,000 in the quarter after buybacks due to strong operating cash flow and high portfolio returns, including $694,000,000 in pre tax unrealized gains from falling interest rates.

Speaker 3

At June 30, our investment portfolio remained in an unrealized gain position of 3,300,000,000 after tax. During this challenging investment return environment, we will remain consistent and conservative in our strategy and do not expect to materially adjust the portfolio asset allocation over the near term. We will be selective but active and will continue to focus on risk adjusted returns and we will not reach for yields. There are a number of factors and the assumed prepayment speeds on our corporate bond calls and variability around private equity distributions. Based on current interest rate environment and a normalization of bond calls and private equity distributions, we continue to expect our quarterly run rate to be approximately $900,000,000,000 Our annualized core operating ROE and core operating return on tangible equity were 11.5% and side of core operating income as realized gains and losses instead of net investment income as other companies do.

Speaker 3

The gain from the fair value mark this quarter of 7 $12,000,000 after tax would have increased core operating ROE by 5 percentage points to 16 point 5% and core operating income by $1.59 per share to $5.21 Book and tangible book value unrealized gains of $1,400,000,000 after tax in our investment portfolio, which again primarily came from declining rates and mark to market gains on private equities. The increase in book value per share also reflects the impact of returning over $2,000,000,000 to shareholders in the quarter. Our pre tax P and C net catastrophe losses for the quarter were $280,000,000 principally from severe U. S. Weather related events.

Speaker 3

There was no overall change to our aggregate COVID-nineteen loss estimate. We had favorable prior period development in the quarter of $268,000,000 This included a charge from molestation claims of $68,000,000 pre tax compared with $259,000,000 in the prior year. Excluding this charge, we had favorable prior period development in the quarter of 3.30 $6,000,000 pretax split approximately 30% in long tail lines principally from accident years 2017 and prior and 70% short tail lines. For the quarter, our net loss reserves increased $1,100,000,000 in constant dollars and our paid to incurred ratio was 80%. Our core operating effective tax rate was 15.8% for the quarter, which is within our expected range of 15% to 17% for the year.

Speaker 3

Now I'll turn the call back over to Karen.

Speaker 1

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

Operator

We will begin with Michael Phillips with Morgan Stanley.

Speaker 4

Thanks. Good morning, Evan, and thanks for all the comments. First question is on growth, I guess, maybe specifically North America Commercial Lines. Are you pleased with the growth there relative to the rate you're getting? And I guess What I'm implying is how much of the growth you're getting is through market share gains versus just overall

Speaker 2

rate? Well, I think it's a serious combination of both. Tension rates and that means exposure growth. That means in your parlance gaining market share. And so all in, very, very strong growth, fundamental growth in the business.

Speaker 2

And by the way, Actual exposure growth was negative in the quarter You saw a 21% growth in commercial P and C.

Speaker 4

Okay. Thanks, Evan. And sticking with North America commercial lines, the core loss ratio relative to 1Q was up a little bit. Was there some impact from portfolio transfer in the second quarter? Or is that a normal second quarter event that happens.

Speaker 4

Just wondering what impact there was of that in a quarter that maybe

Speaker 2

No, it's just normal quarter on quarter seasonalization. There wasn't some impact from LPT or that. And you know the mix of business changes quarter on quarter and that's it. I think the thing you're more focused on is the year on year change and looks pretty strong.

Speaker 5

Yes, perfect. Okay. Thank

Operator

We will now take a question from David Motemaden with Evercore.

Speaker 4

Hi, thanks. Good morning. Just wanted to follow-up on that last question, Evan, just on the North American commercial loss ratio. How much of the 2.4 points year over year improvement was driven by mix Versus rate in excess of trend.

Speaker 2

Sure. You're really asking me the question, I want Help you with it, of LPTs and the impact of writing so much LPT last year versus this year, which can inflate loss ratio last year versus this year. If you adjust for the LPT impact Improved 1.8 points. It was 0.7 on expense and it was 1.1 loss ratio related.

Speaker 4

Got it. That's perfect. That's exactly what I was looking for. Thanks. And that's good to see that accelerate a bit from the improvement last quarter.

Speaker 4

I guess just another question just overall on the expense ratio. Maybe this is also for Peter. I think in the past, you've talked about Some of the improvement being driven by some non sustainable COVID related impacts for T and E, Things like that. Was it did that come back, those one time impacts or are we still realizing some sort of benefit from that?

Speaker 2

No. You're fundamentally looking Overall, a pretty good run rate. And look, if things opened up more and as they open up There'll be more travel related expense, little more entertainment related expense. We don't anticipate it to have a big impact. And that's on the OpEx ratio.

Speaker 2

Remember, the acquisition ratio bounces around with mix

Operator

Our next question will come from Greg Peters with Raymond James.

Speaker 5

Good morning. So the first question will focus And in your press release, I think you said, you're confident these market conditions will continue. So, Evan, you know where I'm going to go with this, which is There's growing

Speaker 2

I don't actually, Greg. There's a lot, but I don't know where you're going. Go ahead. Well,

Speaker 5

Listen, there's a lot of rhetoric in the market that the rate environment is going to start to soften. And so where I'm going with it is From where you sit today, you're producing an 85% combined ratio. That's pretty darn good. Are we going to be in an Environment, say, 2 years from now where we're back to negative rate increases across many lines of commercial or talk about

Speaker 2

Look, I can't tell you what we're going to see 2 years from now. I can give you a sense of in my own judgment, because I don't have a crystal ball of based on the current market conditions and where I think they're going over the medium term right now. I think loss cost I think rates will continue to exceed loss We're exceeding loss costs right now by a reasonable margin. And the industry overall, forget Chubb. The industry overall Has been number 1 achieving loss rates in excess of loss costs for just 2 years now.

Speaker 2

And Secondly, the industry starts at a loss ratio that is quite high. And to achieve a reasonable risk adjusted return, it has to continue to achieve rate in excess And then you have an external environment that has risk around it from cyber to climate to the litigation environment. And All that is baked into, I think, the mood and the thinking among Those in the industry underwriting today. And so in my judgment from everything I see, it is natural I gave you year on year movement in pricing and rate so that You would have a perspective. And as you think about the rate of increase excessive loss cost and I believe that will continue.

Speaker 2

Perfect.

Speaker 6

A lot

Speaker 2

of the answer, but So a good question that I think deserved a fulsome response.

Speaker 5

Well, I and your comments about loss costs Interesting because there's 2 and you mentioned litigation. So there's a The legal environment because of COVID was shut down last year and that's going to come back in spades. And then the second piece on lost costs is there's all this rhetoric about inflationary pressures, especially on things like auto. And do you see that sort of manifesting itself in terms of higher loss costs for the industry as we think about the next 12 months?

Speaker 2

Yes. So here's how I see it. When we look at the long tail lines, we're using a historic trend Ignoring COVID and the shutdown, assuming a reversion to the mean and Which was recognizing, what I think is a relatively hostile legal environment and litigation environment. So there's The actual at the moment is running better than the trended 6 percent we're using. But we think that's a head fake and a timing question in How we imagine trend and therefore what you really need in pricing.

Speaker 2

On the short tail side of the business, I really gave you two numbers. I gave you homeowners. And I gave you homeowners running a double digit observed inflation today. I gave you a long tail I gave you a short tail commercial that we're trending at 4%. On the commercial property side, from all we see and all of our data Currently at the moment, it's actually running below that, both frequency and severity.

Speaker 2

But we see enough of What we see is inflation externally. We see enough of what we see in the homeowners book that We continue to trend it in both pricing and reserving at that 4% range.

Operator

We will now move to Elyse Greenspan with Wells Fargo.

Speaker 7

Hi, thanks. Good morning. My first question, Evan, going back to some of the pricing commentary you gave, it seems like most lines on still healthy levels above watch trend. So we've heard from some folks in the industry as certain mines are getting to rate adequate But it sounds like just really across the board, most lines are still in need of rate. I guess, would you characterize Any lines as being rate adequate or just general kind of pushing consistently a rate across the majority of your commercial lines?

Speaker 2

I'm not sure, Elyse, I heard your commentary, but I'm not sure I got the question.

Speaker 7

I was just trying to get a sense like broadly across commercial lines when you make your commentary about it still being a firm market. Do you Every line still in need of healthy, robust rate increases or any lines maybe more at adequate levels right now?

Speaker 2

Elyse, it really varies across the board. When I look at the industry overall. I think in many classes, the industry in aggregate, if I rolled it all together as one big portfolio, You're great. When I look at it for the Chubb portfolio, most of our business is at or approaching risk adjusted rate adequacy.

Speaker 7

Okay. That's helpful.

Speaker 2

As far as I will go.

Speaker 7

That's helpful.

Speaker 2

But it varies by line, by territory, by class.

Speaker 7

That's helpful. And then my second question, you guys outlined a pretty robust $5,000,000,000 capital share repurchase plan last week. As you think about the opportunities, your excess capital position, do you think that should we think about the capital return being prorated over the next year depending upon where your share price is, Maybe it could come sooner than later. How are you thinking about share repurchase given the $5,000,000,000 and also understanding that you guys bought back a good amount shares in the Q2 as well.

Speaker 2

Nice try, Elyse. Stay tuned.

Speaker 7

Okay. Thanks, Evan.

Speaker 2

You're welcome.

Operator

Now we will hear from Ryan Tunis with Autonomous Research.

Speaker 6

Thanks. Good morning. Evan, one observation I guess we had is The overseas general segment loss ratio improvement has actually been keeping up pretty well with the North America commercial loss ratio improvement. And I guess it's a little bit surprising to us just given the mix. And I was just curious if that surprises you as well.

Speaker 2

No. Not at all.

Speaker 6

So when you think about Overseas General North America commercial you think today had pretty similar margin profiles at this point given pricing conditions.

Speaker 2

Well, they're running different combined ratios. It varies by segment of overseas General by country, by the mix, it varies wholesale versus retail, But overseas general continues to improve at a pace that's very similar to North America's To PACE. I'm a little confused beyond that, Ryan, and I want to help you if I can.

Speaker 6

No, I just overseas general is not a segment where we've been used to seeing a lot of loss ratio for a long time. I thought that was more attributable to the A and H mix. But it's been impressive. I was just No, no. Here it is, Budd.

Speaker 2

The over half the overseas general business is commercial business. And but you haven't been in a market where you take Europe or you take the London market, both Wholesale and retail, those were soft markets for an extended period. And we were scratching dirt for growth, but we were getting And, but we are very disciplined in underwriting and we were making good money and good margins, a decent return, not an off the charts risk adjusted return, but A decent return and relative to the market, we were well outperforming. And what you get is With Europe and then with the U. K, they're slower to react, but you see that reaction taking place.

Speaker 2

That was just an opportunity for us to drive right now, both growth and rate.

Speaker 6

Got it. And then follow-up on Elyse's question, your response that for the Chubb book, it sounds like a lot of lines are approaching risk adjusted rate adequacy. I guess just from a growth perspective, how much is that driving when you're The top line, like when all of a sudden you see a line that a year ago wasn't very adequate and now it is. Is that a substantial marginal contributor to the top line growth we're seeing or is it more incremental than that?

Speaker 2

Hey, Here's how it goes around here. Number 1, underwriting will never destroy book value. So if In this kind of environment, if you're you have to strive in your business to achieve an adequate risk If the market will allow an adequate risk adjusted return on that cohort of business that you are underwriting. And I'll tell you what, more submissions, more quotes And more broker relations, more brokers and agents and drive to write that business. Got it.

Speaker 2

Thank you. We know our minds clearly and that's the point I was really trying to make. We've been growing commercial at double digit now for 10 quarters. No one's really noticed that. Short of that, how many years were people saying, oh, show us the benefit of Chubb and ACE coming Gather and this and that.

Speaker 2

We said it's about underwriting discipline and it's about a market environment. Now you're surprised to see it. Don't be.

Operator

We will now move to Tracy

Speaker 8

Ben Guigley. Please go ahead.

Speaker 9

Good morning. I'm going to give you a breather on pricing and loss trends. There is a lot of market No problem. I don't know if you like this question, but there's a lot of market attention paid to your Century subsidiary with respect to the BSA RC since that entity is in runoff, not rated, not guaranteed and not part of an intercompany pool. So I'm not trying to box you in on the BSA side, but I'm wondering structurally, could you conceivably let that entity's This run dry or could there be circumstances that you may theoretically be under any obligation to contribute capital?

Speaker 9

I mean, I recognize that Century is regulated by Pennsylvania, which is also your

Speaker 2

group supervisor. Tracy, in our 10 ks, we have fulsome disclosure Around Century and our obligation. It is under a statutory order negotiated by and consummated between Cigna and the State of Pennsylvania before ACE purchased Cigna's P&C Business, which included Century. And that 10 ks disclosure Around our obligation to Centuri speaks for itself. It's quite clear And it is a limited obligation and I will leave it at that.

Speaker 9

Okay, great. I also recognize that Bermuda is opposing the G7 tax proposal. In theory, if it's a minimum 15% global tax rate floor hold, how would you be thinking about Chubb's seating arrangement with overseas

Speaker 2

affiliate. How would I think about what about affiliate?

Speaker 9

Your ceding arrangement. Yes, your seeding arrangements with overseas. Our seeding arrangements.

Speaker 2

We cede risk for pooling and capital efficiency purposes. That's the reason we do it. We don't do it for tax purposes. I'll give you a very simple example so you'll get it really clearly. Imagine that on Chubb's balance sheet, I can take $10,000,000 net per risk on a given class of business.

Speaker 2

But imagine that in all the countries we do business in around the world, I can't take that kind of retention Because of my limited amount of capital, if I tried to take it in each jurisdiction and I had a loss in Malaysia or I had a loss in XYZ country. I'd have to be dividending out of one place, contributing capital in another. It's the most inefficient way to run a business. So the pooling of risk and internal reinsurance is what allows you to leverage Global balance sheet to the benefit of local operations and it provides in one place The stability of spread of risk against an amount of capital. So that's the fundamental reason That you start with that Chubb uses internal reinsurance.

Speaker 2

Thanks for the question, Tracy.

Speaker 7

Thank you.

Speaker 8

Welcome.

Operator

Our next question will come from Brian Meredith with UBS.

Speaker 10

Yes, thanks. Evan, just curious, the big $5,000,000,000 share repurchase authorization you announced. Does that all indicate kind of what your view is of inorganic growth opportunities opportunities or at least your appetite.

Speaker 2

No. Nothing has changed, steady as she goes. We're disciplined everything I've ever said about M and A. We're disciplined. Money doesn't burn a hole in our pocket.

Speaker 2

It has to advance what we're doing strategically. It has to be good for shareholders in terms of value creation. All of that, nothing changes. Our earnings generation power as we see it, Our current capital position and surplus capital together led us to the decision that the right thing to do and the prudent thing to do, just walk into the talk we've said about we'll hold capital and have capital flexibility for risk and growth, Organic and inorganic, and we'll return other than that to shareholders. That's all we're doing.

Speaker 10

Great. Thank you. And Evan, another question here. You all are fairly meaningful player in the cyber insurance marketplace. I'm just curious, can you give us kind of Your thoughts on that marketplace right now.

Speaker 10

I know there were some issues with losses last year, but understand that the pricing environment is pretty good right now and just your view of opportunities there.

Speaker 2

Yes. Look, the pricing environment is pretty good. But that's not it. That's not That is not addressing by itself the fundamental issue that the industry has to wrestle. And Chubb is beginning to respond to, but others are slow to react to, that are the fundamentals around cyber.

Speaker 2

Like pandemic, cyber has a catastrophe profile And the nature of cat potential that has no time nor geographic boundary to it. And you take the growing digital interconnection of the world today Raising its head. In all the cyber attacks we see, malicious cyber attacks, both nation state and non nation state actors for various reasons, one to disrupt society, another to make money. So you have a frequency of loss on one hand and rate and some adjustment coverage to manage that. On the other side of the coin, you have a systemic nature of this.

Speaker 2

And I can tell you in the way Chubb underwrites, we are facing it and we are beginning to address it And then on the in underwriting and then on the other side are the real public policy questions. And we are involved in raising our voice in the public policy arena. Number 1, when you look at ransomware, While I don't think the government should outlaw ransom, we are payments at this time. I do think that we ought to be looking at whether we allow crypto payments. I do think the nature because who are you paying, terrorists.

Speaker 2

Secondly, treasury right now, you should be obligated Under current laws, anti money laundering laws to get permission to make a ransomware payment. We should be removing the incentive out of the system for ransomware attacks, which are all about money for the most part. And on mask, what is the social or the intention to disrupt our country politically and on mask part of it and show it. Secondly, there are all kinds of things that the private sector and public sector could be doing together. Sharing of information is one of them right now.

Speaker 2

And understanding where systemic risk aggregations are is another. So I'll stop right there, But it is more than about achieving rate in cyber today.

Speaker 4

Thanks Evan.

Speaker 2

Sorry, Brian, more than you expected, but We have clear views about this.

Operator

We will now hear from Meyer Shields with KBW.

Speaker 8

Good morning. 2, I guess, small ball questions. Evan, you talked about the general expense ratio. But I was hoping you could give us a little color on what drove the actual decrease in administrative expenses in North American commercial year over year.

Speaker 2

Oh my gosh. Well, Meyer, how about we take that one offline with you? We'll go through the accounting of it. There was nothing substantial.

Speaker 8

Okay. Fair enough. In the same sort of tone, other income or expenses in North America Commercial, that was negative 14. Is there anything unusual in terms of what's building up to that number?

Speaker 2

No, nothing unusual. Within that, it's just noise, quarter to quarter noise.

Operator

And with no additional questions in the queue, I will turn the call back over to your host for any additional or closing remarks. Thanks Ladies and gentlemen, this will conclude your conference for today. Thank you for your participation and you may now disconnect.

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Chubb Q2 2021
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