Release Date: April 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Could you provide more detail on the recent accident year reserve increases in business insurance for liability lines?
A: Daniel Stephen Frey, Executive VP & CFO: The recent accident year adjustments are minor and reflect a proactive approach to managing uncertainties in liability lines, which are inherently longer-tailed and leverage IBNR (Incurred But Not Reported) reserves. Alan David Schnitzer, Chairman & CEO, added that these adjustments are in response to ongoing trends and are relatively small in the context of the total reserves.
Q: How sustainable is the improvement in the personal auto business, considering the mild winter's impact on frequency?
A: Michael Frederick Klein, Executive VP & President of Personal Insurance: The mild winter contributed less than a point to the improvement in the underlying combined ratio for auto insurance. The primary driver of improvement is higher earned pricing, with more benefits expected to materialize.
Q: Can you discuss the competitive environment in business insurance, especially with the sustained high renewal rate changes?
A: Alan David Schnitzer, Chairman & CEO: The market is reacting to various risks and uncertainties, including social and economic inflation, tight labor markets, and geopolitical tensions. The competitive environment reflects these factors, with disciplined pricing and terms seen across the industry.
Q: What are your expectations for ROE targets in 2024?
A: Alan David Schnitzer, Chairman & CEO: Specific ROE targets are competitively sensitive and closely tied to pricing strategies. The company considers the evolving interest rate environment and aims for a margin over the 10-year treasury and cost of equity.
Q: With the rate improvements in personal auto, are you positioned to pursue growth in this market?
A: Michael Frederick Klein, Executive VP & President of Personal Insurance: The focus is on profitably growing the auto segment, with state-specific strategies to adjust non-rate actions and improve profitability. Growth is pursued in states where rate adequacy has been achieved.
Q: How are you managing the liability reserve increases, and are there any changes to long-term loss trend assumptions?
A: Daniel Stephen Frey, Executive VP & CFO: The company continuously evaluates its reserves based on the latest data, making necessary adjustments. While recent increases are modest, they reflect a cautious approach to potential uncertainties in liability lines.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
