Yaron Kinar: Okay. Fair enough.
Evan Greenberg: I just don’t know what they’re each picking for loss cost and then how — whether they want to underwrite to a 97% or 95%, when at Chubb, we’re just not going to do that.
Yaron Kinar: Point taken. Makes sense. The other question I had, North America Commercial, the underlying loss ratio improved year-over-year. Nonetheless, was a bit elevated relative to the first half. Were there any one-offs this quarter or in the first half? Or should we look at the year-to-date as a reasonable run rate?
Evan Greenberg: Yaron, take a step back, if you would, with me for a second. Look at the combined ratios we are putting on, they are world-class. They are unbelievably good. They’re believable, because they’re real. They are tremendous. North America’s loss ratio year-on-year has improved almost half of it from what is a really world-class to begin with. It speaks for itself. These are great combined ratios. And when you look at sequential this or you look at that, I just don’t relate to that.
Yaron Kinar: Fair enough. And certainly great combined, no…
Evan Greenberg: It’s like — it’s tremendous. And you take that kind of — those kinds of underwriting margins, you add stronger premium growth to it, you look at what I think is responsible pricing across the portfolio, ex cat for an accident year for insurers right now are going to look lower because everybody is more cat-levered in their pricing — in their combined ratio because they’re writing more property and they’re getting the price on — probably they’re writing more property and taking more cat exposure, of course. And the real action to me is, therefore, what’s your published combined ratio? Are you charging adequately? And by the way, that includes are you charging adequately for your property and property cat exposure?
There’ll be volatility quarter-to-quarter, but over a period of time and masked within there, what are you picking for your casualty combined ratios? And how are you underwriting for that? And when you mix the two together, you better be running a pretty darn good current accident year ex cat combined ratio. That’s more of the way I would be thinking about this if I was on the outside.
Yaron Kinar: Noted. Thank you.
Evan Greenberg: You’re welcome.
Operator: Your next question comes from the line of Brian Meredith with UBS. Your line is open.
Brian Meredith: Hey, thanks. Good morning, Evan. First one, any green shoots at all and maybe the pricing environment for financial lines here? I mean, it’s been pretty competitive here for a while. I know that we’ve talked about the cyber losses coming through. What are you seeing there?
Evan Greenberg: No, I’m not seeing. It’s pretty — this industry just has — does what I think is a pretty dumb stuff at times. And financial lines is a very broad category. It has everything from public D&O to private D&O, non-profit D&O, errors and omissions of all kinds, cyber insurance. So, it’s a real dog’s breakfast of a lot of different lines. And each one goes to its own drum right now a bit. There are large pockets in there that I think are stable and/or managed adequately or handled decently. Then you have a couple where, my God, the number of MGAs that have pens today and the amount of capacity that proliferates. And by the way, a lot of that capacity coming back to the same balance sheet aggregating back, and you’ve got this sort of circular firing squad, which we tend to do now and again.
It’s in those areas that I don’t see green shoots. And then the rest behaves reasonably to me. So, I wouldn’t lump — my first message to you, don’t lump financial lines altogether. And then secondly, there’s a couple of dumb areas.
Brian Meredith: Makes sense. And then my second question, Evan, a little bigger picture here, just thinking about just generally, the general casualty lines here. As you kind of pointed out, really attractive combined ratios that you’re printing and in the industry in general. And now we’re also looking at long-term interest rates that are, gosh, decade high, right? Are we seeing any weakness at all from a pricing perspective? Do you anticipate that’s going to start happening here in the next 12 months, just given the return profile of the business and how attractive it is?
Evan Greenberg: I haven’t seen it really, because higher interest rates are also a proxy for loss cost inflation. So, you’ve got an industry that I think is trying to stay on top of loss cost or has that impetus behind them to stay on top of loss cost in casualty. And other than in workers’ comp, it hasn’t been totally benign as you well know, and it’s been around for a while. So, I think that higher yields are ameliorating. And by the way, if you do the math and you translate the higher yields to what it means to earn the same return, what combined ratio affect you would get to achieve the same return, it’s modest in combined ratio relatively, 1 point here, 1 point there, it’s not like, wow, I can raise my combined ratio as 5 points to achieve the same 15%, as an example, risk-adjusted return. No, you can’t, and we run the math.
Brian Meredith: Makes sense. Thank you.
Evan Greenberg: You’re welcome.
Operator: Due to time constraints, your final question comes from the line of Alex Scott with Goldman Sachs. Your line is open.
Alex Scott: Hi. I wanted to ask about the environment broadly in Asia, across the different countries. And just now that you’ve scaled up that business in a bigger way with the addition of Huatai being consolidated and so forth. What are you seeing in the environment? Where do you see the growth opportunities looking ahead?
Evan Greenberg: Yeah. Well, we touched a bunch on it last quarter, and I’m going to just — it doesn’t change in two or three months. So, I’m going to reiterate it a bit to you. We operate in 12 countries in Asia. Half our business is commercial, half is consumer. And the consumer spreads across non-life and life. We’re the largest direct marketers of insurance in Asia easily. And our life and non-life operations work closely together. We have huge digital capabilities that have grown out at dust. And the world is converting in direct response marketing from phone-based to digital to a combination of the two. Our agency operations for distribution, our brokerage operations for distribution, we play up and down the food chain of lower middle market right through to the largest corporate and we segment distribution and product that way.
And it is across 12 distinct markets. Asia and North America are the two regions, I think that will have the greatest economic growth potential over the next decade or two. And Asia, get out of China, Asia is very vibrant, very dynamic. North Asia, older population. Southeast Asia with over 700 million people, young populations, and those economies are growing more quickly and they’re emerging. Look at Vietnam today. Look even where Indonesia is going today. Singapore, those markets are all — and Thailand, those markets are so dynamic with a lot of opportunity, but it’s hard work. You have to really know those markets, and we’ve been there for decades. And we have spent the time to build and build and build capability on a local market basis.
It’s nothing to say you’re in Asia. It’s where are you in your capability in Thailand or Vietnam or any of these markets. They’re distinct and you’ve got to have local capability, knowledge and a good command and control around underwriting. I’m very energized about what I see for this company over time in Asia. And I think it will continue to represent over time a greater share of our business. Thanks for the question.
Alex Scott: Thanks.
Operator: At this time, I would like to turn the call back over to Ms. Karen Beyer.
Karen Beyer: Thank you, everyone, for joining us today. If you have any follow-up questions, we’ll be around to take your call. Enjoy the day.
Operator: Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.
