Greg Peters: Excellent. Good morning, everyone. Evan, in your prepared comments, I think you mentioned a recent trip to Korea. You talked about the Life results. Maybe you can give us an update on the Cigna acquisition, how the integration is proceeding and if there’s any update on sort of ROE targets related to Cigna now that it’s in the Chubb family?
Evan Greenberg: Yes. I’ll just take the last part first. As you know, the egg is scrambled now. And so we don’t really spike that part out. But look, I’m — I am energized by what I see in Asia and what we have bubbling. And by the way, I’m going to do third quarter earnings from Asia. I’m going to do it from Singapore because I’m going to spend six or seven weeks out there. The integration is going so well. And we’re so energized by what we see in the power of the organization with the two parts pulled together. The integration has gone extremely well. And of course, all the efficiencies, that’s the easy part in a sense, that’s all right on target. But it’s the — growth and the breadth of capability, our direct marketing business.
We’re the largest direct marketers of insurance in Asia. There’s not a doubt to me, both through telemarketing, through digital, life and non-life, the breadth of product there. The number of partnerships that we have between the organizations and the compelling offering, given the breadth and the ability of our life and nonlife together, work together like one organization. No one else really has that. The customer database we have between the companies that numbers in the millions of customers to cross-market and cross-sell to that we’re just actively doing through telemarketing and digital. The growth of our agency organization, whether it’s in Korea through independent life agency distribution or in places like Thailand and Vietnam with tens of thousands of agents that are growing.
When I look across Korea, Thailand, Indonesia, Taiwan, even Hong Kong, that’s small, but the combination of the two and growth is accelerating in these areas, the number of partnerships that we have. So when I add it all together, I feel really good about what we have as franchise and capability and the potential of it over time. And by the way, a lot of the same features I see in Latin America, a much smaller region just the geography and the size of economies. But wow, it’s excellent. And then by the way, I’m sure you noticed that in the quarter, Europe grew 10%. That’s 40% of their business renews in the year and they do in the year, and they grew at 10%. So it’s really broad-based, and I like what I see.
Greg Peters: Yes, the Europe numbers are kind of surprising against the backdrop of the macros news that we read about here and there. I spent some time during the discussion talking about all the data resources, the analytics you have. And one of the topics that’s become more popular and more recent is this ChatGPT. So maybe you can segue and talk about how you’re deploying AI across your organization and the opportunity you have to drive further efficiencies as you utilize these types of tools?
Evan Greenberg: Yes. I’ll touch on it a little bit. ChatGPT is generalized AI, which is text-based analytics and deep thinking. We use other kinds of AI, deep learning, and others beyond that, that are numbers-based, math-based as well. We’ve been experimenting in the use of various forms of AI is the point against different areas of our business, depending on the kind of opportunity or problem or enhancement of power that we’re trying to address from underwriting and insight in risk cohorts to claims to — cut to marketing and analytics for customer interface and customer service or telemarketing. And we’ve been doing this for the last five years. We have a variety of use cases that have proven themselves out. And we continue to iterate with it.
We have a lot of data, and we have an ability to enhance that data with external data. It’s not simply about AI tools. It’s about data and your ability with that. So therefore, you keep pulling a string in your data infrastructure becomes so important. And data engineering becomes so important because it’s a fuel that AI needs to feed on itself in all its varieties to become insightful and powerful to you. And in most cases, it’s not going to replace our highest skilled knowledge workers. We won’t do that for quite a while. But it certainly enhances the abilities and the capability. I’m not worried about my job. It certainly enhances their capabilities. And now we’re in the dawn of the period where we use these tools at scale. And the things that we have built and experimented with, the momentum builds and they start rolling out at scale.
And that means insight. That means speed, that means accuracy, that means cost, that means momentum. And think of that in terms of a number of years, it’s not months.
Greg Peters: Great. Thank you for the answers.
Evan Greenberg: You’re welcome.
Operator: Your next question is from the line of Elyse Greenspan with Wells Fargo. Your line is open.
Elyse Greenspan: Hi, thanks. Good morning, Evan. My first question is on the reinsurance market. You guys saw some growth in your reinsurance segment. But it sounds like from your commentary, you’re seeing better opportunities. It sounds like on the primary property side than perhaps to write more property reinsurance business, but I was hoping you could just expand on that comment and correct me if I’m wrong.
Evan Greenberg: Yes. No, you’re correct. We’re — we got a finite balance sheet. We can’t take infinite amount of risk. And we like the risk reward and the total opportunity. On the primary side, we’re much more biased on the primary side than we are on the cat REIT side. And so that is correct. So our cat REIT and CAD and property excess and property quota share business. So not just straight cat REIT. Those are areas where we’re taking more exposure. But — you’re right, overwhelmingly, when we look at the market and the risk reward, we’re more primary oriented.
Elyse Greenspan: Thanks. And then my second question, Peter, I know you said that you guys will consolidate the Wati ownership when it goes above 80%. I’m not sure if Chuck has disclosed like the earnings from Huatai historically? Or can you just give us a sense of the expected contribution on once that is consolidated or any help you can provide there?
Peter Enns: Yes. We typically don’t — we have not disclosed Huatai’s earnings specifically. We’ll have more comments after it closes and we consolidate it. And what I’ve said historically is it won’t have a material impact on a net basis to us in terms of earnings.
Evan Greenberg: What we say — is it will be pretty neutral initially.
Elyse Greenspan: Okay. Thank you.
Operator: Your next question is from the line of Tracy Benguigui with Barclays. Your line is open.
Tracy Benguigui: Good morning. A quick question. Do you manage your business more on net growth than growth? Or is that vice versa? I’m just thinking about capital consumption, if you’re retaining more, could that dampen how much you want to grow growth premium?
Evan Greenberg: No. You — frankly, we disclose our net to gross. And you see that’s pretty steady. And we manage — we measure both, and we use both gross and net for different reasons, different purposes. When I’m going to manage the balance sheet, it’s net. When I’m going to look at marketing and swinging a stick on our capacity, et cetera, it’s growth. It’s a much more complicated answer — question, but it’s when you get to operating but it’s both.
Tracy Benguigui: Okay. So I just wanted to make sure that I understood prior comments correctly. So the 4% growth in gross premium written we saw in North America commercial lines, which was lower than we’ve seen in prior quarters, that had to do more with business?
Evan Greenberg: It has more volatility to it because of risk management business and certain kinds of businesses that have a gross line component to it. But in that case, I’m driven an ROI and all our discussion when we look at stick to the bones is on the net basis.
Tracy Benguigui: Got it. I am also curious to…
Evan Greenberg: …companies talk net, not gross. But both are important to us as operators for different reasons.
Tracy Benguigui: Got it. I’m also curious, did you increase your loss picks from banking D&O claims activity this quarter? I noticed that your North America commercial lines underlying loss ratio improved both sequentially and year-over-year. So I’m wondering if that improvement would be in spite of any raise and off-peak?
Evan Greenberg: No.
Tracy Benguigui: Thank you.
Evan Greenberg: You’re welcome.
Operator: Your next question is from the line of Alex Scott with Goldman Sachs. Your line is open.
