ACE 2Q15 Earnings Call Notes

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The underwriting environment continued to soften this quarter

“I want to now say a few more words about current commercial P&C insurance market conditions. The underwriting environment continued to soften in the quarter for our commercial P&C business globally. As I have been saying, the underlying pattern we have seen over the last few quarters is that large account business is more competitive than midsized, wholesale is more competitive than retail, and property more so than casualty-related.”

Folding Chubb international operations into ACE’s

“There will be a lot of efficiency we will gain between the two operations, because they are a duplication. Our plan is to integrate Chubb’s international business into ACE’s. So, we will have only one statutory entity in the geographies and the vast, vast majority of those will be ACE entities. Canada is an exception. We will integrate ACE into Chubb up in Canada.”

I guarantee that we will covet Chubb’s claims capability and service

“For agents and brokers, they want to know that we are going to behave in the similar way. They want to know that we are going to covet Chubb’s claims capability and service, which is simply renowned. And I can guarantee you we are going to do that. And they will be leading those efforts.”

We will keep compensation structures in place too

“Agents want to know that we are going to maintain compensation structures and that by the way, that we are going to keep the agency, the independent agency system as a centerpiece of distribution here to the customers. And we are being loud and clear that that is without a doubt”

Opportunities to enhance Chubb’s offerings with ACE’s

“Chubb does a great job in traditional middle market products and some specialty products and towards industry verticals that they are such a great deep knowledge of and are great at. On the other hand, imagine the products that ACE sells, everything from environmental liability to farm and ranch to product recall, the construction and we could go on and on with a lot of product that will enhance the offerings to those verticals and also might help to expand into a few others as we go along. That’s middle market, and that is distinct from small commercial, which we have each been have sort of nascent efforts towards that we will endeavor to pursue in a far more meaningful way.”

Most of our competitors are good stewards of capital, they wont buy just to buy

“I have been reading lately that there will be more large acquisitions because of ACE and Chubb. When I think about it, I am not sure that’s right. I can’t speak with any certainty but first of all, most of my or many of my competitors are very thoughtful and they are good operators and they are good stewards. They attempt to be good stewards of shareholder money. And they have a good sense of strategy for their companies. Anybody who thinks that way, first of all is going to look at an acquisition not from a point of size, they are going to look at it at the intrinsic value due to the characteristics of that to be acquired holds. And whether it is truly value-creating in a transformative way, otherwise you don’t do something large.”

I don’t think you can really say that better data will ameliorate the cycle

“the question about cycle management and data and all of that, I think you can’t paint it with a broad brush. And I think those who do are simply, they are overly simplistic in either how they think or certainly in how they describe certain areas of the business where you have broad distribution reach to get the customer, where you have more homogeneous pools of risk, lower severity-related, higher frequency-related, I think that is where there is a bit more discipline at least at this time. So, you would say more smaller commercial, more middle-market commercial, I think that is less subject though hardly immune on one hand. I think as you get up to upper middle-market, larger risk, I think you have a lot of players with a lot less data. People are buying much bigger limits, so you have a lot piling on to the same risk who just have capital and an underwriter and a dog and are chasing some volume. And there I don’t see that same sort of well. The insights of analytics will ameliorate a market cycle.”

ACE is rebranding as Chubb

“Well, we haven’t said Corp., but it will be Chubb. It will be Chubb something. It might be Chubb Limited at the parent. We have ACE Group Holdings as intermediate holding company. It may be Chubb Group Holdings.”