And so, we’re participating heavily and choosing to do it there. On the — and we’ll see what 1/1 produces, and if we like the risk-adjusted returns on a relative basis to insurance, then we would lean in and do more in the property cat area. But it’s not — the money’s not burning a hole in our pocket by any means. On the other side, reinsurance casualty, as I just said, look, it’s not a new story to us about casualty, and nor to our — those who run our reinsurance business. They have the insights of Chubb’s insurance business. And so, we’ve been very, very cautious and we’ve shrunk our market share significantly. If casualty re-improves to a point where it reflects the environment and you can earn a reasonable risk-adjusted return, you’d see us right more there.
Other than that, we’ve got plenty of handles to pull in Chubb, and we remain patient and cautious. It’s the only way to outperform in the insurance business, as far as I know, overtime.
Greg Peters: Got it. Thanks for the detail.
Evan Greenberg: You’re welcome.
Operator: Your next question comes from the line of David Motemaden with Evercore ISI. Your line is open.
David Motemaden: Thanks, good morning. I just had a question on North America commercial and the growth there. Obviously, the net premium written growth is coming in just as you said it would, Evan, but I’m looking at the gross premium written growth and that decelerated a bit to 3% from 9% last quarter. I’m wondering if you could just walk through some of the moving pieces as to why that decelerated a little bit.
Evan Greenberg: Yeah, thanks so much, David. Look, it’s pretty simple. It was a couple of non-repeat or one-off fronted or structured deals. So, adjusting for those — and really like two or three, the gross growth was actually in line, right in line with that. So, there’s no underlying trend or broad sort of systemic. It was simply related to a couple of fronting deals.
David Motemaden: Got it. Understood. And then, just on — Peter had mentioned overall ongoing reserve development still strong on the ongoing business and all in. He had cited $55 million of unfavorable on long-tail lines, which is small, but just wondering if you could just talk about what segments that was focused in and what lines were driving that, and maybe a little bit of detail on what’s going on?
Evan Greenberg: It’s no — there’s nothing new, no news story about it. It’s auto and excess casualty, and it’s those years of ’17 to ’19, maybe a little bit of ’16, and that’s about it.
David Motemaden: Got it. Makes sense. Thank you.
Evan Greenberg: Yeah. This is — there aren’t more words for me to that — we’ve all been talking about it, so, for a number of years, and it is — just continues to develop a bit and we just strive to stay right on top of it.
Operator: Your next question is from the line of Mike Zaremski with BMO Capital Markets. Your line is open.
Mike Zaremski: Hey. Great. Good morning.
Evan Greenberg: Good morning, Mike.
Mike Zaremski: Good morning, Evan. I guess I’ll ask a question specifically on the North America commercial segment, and it’s kind of has to do with, I guess, reserves too, taking off with some of the other questions. But if I just look at year-to-date, and this definitely isn’t a Chubb-specific phenomenon, but I’ll cite Chubb stats, reserve release levels running, let’s just say, 50% below last year, 50% below even Chubb’s like historical five years looking at our model. I guess it implies something has changed, And I guess the question we get from investors — and by the way I’m cognizant the absolute combined ratio is great. But the question we get from investors is, if reserve release levels have changed so much, why haven’t loss cost inflation assumptions changed materially? Is that anything you’d like to comment there?
Evan Greenberg: Loss cost inflation, let me tee off of that for a second. I think your mental model may not be exactly right. Loss cost inflation over the last two years and maybe longer, you’ve watched it step up our disclosed loss cost inflation. And when it steps up, it first impacts your view and therefore your pricing and your loss ratios for your current accident year. You then have to apply it going back on your in-force reserves. But your in-force reserves continue to develop. And as they develop, if they develop with more inflation in the current calendar year than you imagined, and you think it has credibility, then you have to adjust those reserves going back. And then, that informs your inflation factor you’re going to use in the current period.
And that’s why you see inflation as loss cost inflation has evolved over the last few years with the notion of increase of frequency of severity in particular. You had the pandemic and those who I think were smart were careful and didn’t imagine that patterns had changed even though you couldn’t observe them and kept trending the same. But you trended the same and if inflation was a little worse when you look back on it, then you have to keep adjusting for that. We have produced, what I can tell, $600 million through three quarters or more of prior period reserve, positive development. That’s on a trend of a net $800 million. And we’ve had legacy run-off exposure, asbestos, environmental, molestation, all of that included in that. I think when you look back historically on Chubb, the reserve development is pretty steady and pretty prudent there.
Mike Zaremski: That’s very helpful. I appreciate you partially correcting the way I was thinking about it. I guess my quick follow-up is, you’ve talked more than some of your peers about exposure acting as rates. And maybe it’s not fair, but some of your peers say that only some exposure act as rate. I don’t know if that’s a conversation you want to have or you want to delve into whether you think the vast majority of Chubb-specific exposure really does act as rate more so than others, or anything you want to add there? Thanks.
Evan Greenberg: No, I think both comments are consistent. It depends on what line of business you’re talking about. And we adjust our exposure, it’s adjusted exposure. And therefore, it adjusts to reflect only that portion of the exposure that acts like rate. And that will vary by line, different for general casualty than it is for workers’ comp. Different for property, how you look at it — how you view it. So, the percentages and the ingredients, it varies by line of business. And that’s reflected in how we look at it for ourselves and disclose it to you. And then, by the way, depending on the line of business, we also, to make it one step more complicated, but you don’t need to worry, we just show you a net of it, we also, there’s economic, and then we have insurance adjustments that can take exposure down. We increase retentions of a client in casualty. We increase deductibles in property. That’s actually reducing exposure and that adjusts and gets netted.
