Next, get cozy as we head back to New York for a fireside chat led by my colleague, Lawrence Wilkinson. Larry, over to you. Great, Dennis. Thank you. Hi, I'm Lawrence Wilkinson, I head up our non-life insurance ratings practice at S&P Global. In starting out our next session, I'd like to point out that while prospects for the property casualty industry have been generally favorable over the last several years, the outlook for the intermediate term is fraught with a number of key risks. Geopolitical uncertainty, inflation, climate change, and increased recession risk are but a few of the emerged risks that complicate the development of strategy and its successful execution in the current environment. Joining us today to provide his perspective on how to navigate these challenging times is Evan Greenberg, the Chairman and Chief Executive Officer of Chubb. While he needs no introduction to this audience, I would highlight that Evan's insights come from over 45 years of experience in the industry with both Chubb and AIG. Evan, I want to thank you for joining us today. Larry, it's good to be with you. Great to see you. Okay. Fantastic. I guess just in terms of kicking us off today, I'd like to maybe start with your take on the macroeconomic backdrop. This year in your chairman's letter, you kind of kicked off the year with a note of optimism about 2022, and I guess as I kind of look forward a little bit, over the last two or three months, we've seen a couple of uncertainties hit the picture in terms of the overall macroeconomy. Can you talk about some of the challenges that you're seeing? Yeah. I think the themes haven't changed dramatically, but I think the implications have maybe more significantly. The war in Ukraine, a war on European soil, the first that we've seen in 70 years, really, and is shocking to the world, and it has many implications. Inflation, I'll come back to that, but food and energy security, when I look forward, are going to be a great cause of geopolitical instability. The energy shortages that are created as a result of cutting off Russian energy supply, that means the developed world is going to take the vast majority of energy, and they're going to take away from developing countries. They're going to suffer greatly. Food insecurity. That's going to be a growing issue, and we're only at the beginning of that, and we're going to feel those kinds of energy and food shortages that are going to create, in my mind, great geopolitical and political instability, and we're going to feel more of it right here in the U.S. as well. That leads to inflation generally. It is both supply and demand related. I've said for quite some time, for almost two years now, that the Fed is behind the curve and not recognizing. We are moving towards a period, I think, of stagflation. Potential stagflation is, the risk of that is much higher than it has been, and inflation is going to be more stubborn and more persistent. You add to that, Ukraine, Russia has poured gasoline on an already difficult supply environment. On the other hand, we have China, and its COVID policies have deeply impacted supply chain and supply. That's going to persist for a period of time, I'm afraid so. I think that we're going to have more of an inflation problem, and the Fed is going to be more aggressive in its actions, and that is going to create more volatility in markets, et cetera. Okay. Thanks for that perspective, Evan. I guess turning our attention to the underwriting front. You've kind of laid out a picture of the economy and some of the challenges that are ahead. I guess, we've seen over the last couple of years, industry profitability's done well despite some of the challenges posed by COVID. Given kind of this more uncertain economic backdrop, how does that affect your strategy in terms of underwriting some of the risks that you're willing to undertake? Well, I think, two front and center to begin with, inflation and how insurance companies actually go from recognition that inflation is elevated in terms of loss costs and values or exposures that we insure, and taking that from recognition into action, and doing it on a global basis, is where the rubber really meets the road. Not falling behind in exposure and price recognition, and managing on the claims side, that has been a major task at Chubb, to not just be crisp about data, but the cycle of data to action and that we do it more quickly. In an inflationary environment, you have to be very, very quick. Things will get behind you pretty quickly. Secondly, the geopolitical risk I just talked about. We're a large writer of trade credit and political risk, and it is in less developed countries, and there's going to be greater instability because of energy and food insecurity. Then on the liability side of the business, loss costs are not benign. As courts open up, there is more of a surge in claims and claims inflation on the liability side, as a result of so-called social inflation. Which is a combination of things like litigation funding, populism, that rears its head in the courtroom where they want to redistribute wealth and a negative view of corporations and what should be their responsibility. That is finding its way in the loss cost environment. Looking ahead there, I'm concerned when it comes to ESG type issues, especially around climate change right now and directors and officers' liability. When I think about greenwashing, every company that is declaring themselves that the company is going to be net zero, that sounds great in the beginning, but you're going to have to disclose very quickly, all those companies, what's your progress? How are you moving along in achieving that? If it's just vague words, there are going to be a lot of shareholder suits, because companies are overpromising. I just think about it on the insurance side, where insurance companies are declaring net zero, which means that your underwriting portfolios, you'll know the carbon footprint of all your insureds, collectively, globally, and therefore, you'll be able to show how it's going down and ultimately to zero. The tools don't exist today, and at some point, that's going to be called out in suits. That is on our minds as well. Finally, climate change itself. Not just the protections we provide and being able to price and manage exposures in a more precise way as volatility of weather increases from all kinds of perils, all year long. There are no cat seasons any longer. Not just the ability to do that, but to then use it truly to provide greater services and resilience to customers and to aid the society as it's exposed while it moves to net zero, I think is very important. Okay. Thanks for that, Evan. In your answer just now, you touched a little bit on geopolitical risk. So one of the things that's interesting is that over the last two to three decades, we saw this great move towards increasing cooperation globally and globalization. It feels like recent events and some of the recent trends have suggested maybe we might be on the dawn of a new multipolar world order. I guess, in thinking through that, how does the emergence of kind of the new era of political cooperation or challenges or some of the groupings that are starting to be created, how do you think about that in terms of how it affects your strategy as well as your operations? Yeah. Look, the world is moving more multipolar and coalesced more around the United States on one hand, and China on the other hand. That each represent different models of governance, different values, different cultural histories that inform their political construct. One more centralized, more authoritarian, other democracy. Globalization, on the other hand, over the last 70 years, liberalization of trade and globalization has lifted more people out of poverty and created more wealth, as they became more market-oriented, though rules-based, than any other system or period of time in human history. That notion should not be easily dismissed, even as we break down maybe into more multipolar from a political point of view and a security point of view. Being able to keep trade open because it's in the national interest of all countries. China wants peace and prosperity for its people. The United States wants peace and prosperity, the Europeans too, et cetera. An ability to maintain open trade is so fundamental to that. Inflation and the cost of goods is related to globalization. I wouldn't easily dismiss and put the nail in the coffin that globalization is going to disappear. We are in a period of, if you have scarcity of energy and scarcity of food, you're going to have greater nationalism in energy and in food, as an example. There are the issues of rivalry between the polar leaders and a need to protect your technology, where it's key to your security or to the heights of your economic future. Those really ought to be managed with high wall, small garden and not conflated to trade broadly. On one hand, while there's the emotional push towards less globalization, and you see that. On the other hand, I do think there are cooler heads that will emerge of how do we find this balance. That's my first answer to you is, as a global leader in our business, but engaged deeply as a multinational, we have a lot of experience and knowledge of this. We use our experience to help try to influence the debate and in everyone's interest. Secondly, we operate on the ground locally in all the countries where we are. It's not like manufacturing where we can move. Where we're invested, we're invested permanently and through good times and through bad times and through thick and thin, we're a local citizen. When one part of the world has a little more instability, another part of the world is doing well. We think about that, and I'll wrap up with this. We think about that multipolar world you describe and in those terms. Let's also remember, Asia is probably where more than 60% or 70% of the wealth creation that's going to take place over the next number of decades. While they'll have its own instability signature to it also presents great opportunity, and you have to be able to navigate that. Finally, what that means is you can't just be in a company of insurance professionals. You have to raise a generation of internationalists who understand this and understand how to operate in these regions of the world. Okay. Thank you for that, Evan. I guess, one of the topics you raised up a little bit earlier on the macroeconomic front was the idea of social inflation. When I look back to our panel last year at the conference, we posed the question to our CEO panelists, and they unanimously raised social inflation as the top concern they had over the intermediate term. Can you talk a little bit about developments on social inflation front and kind of what the industry is doing to help combat some of those risks? On one hand, I think we have to be mindful that the industry itself can only do so much to change the environment in terms of legislation or regulation. Whether I'm thinking about legislation that changes laws and at state by state, that help to mitigate some of the liability-related issues we see, or I think about regulation around things like litigation funding. The industry has a role to play, we can only do so much because we're viewed by, on one hand, the trial bar is viewed a certain way, the industry is viewed with suspicion when we come forth to suggest changes or to lobby for changes, that somehow we're the bad guys, we just want to deny people money and feather our own nests. This is an issue for corporate business and industry, corporate America in this case, or if it's in the U.K., or Australia, the corporate community in those countries. We along with them, this has to be important because this is a tax on business. It's a tax on society. We intermediate money. We don't print it as an industry. I think efforts like the Institute for Legal Reform with the U.S. Chamber of Commerce, where industry broadly pools resources along with the insurance industry to affect legislation state by state, and to lobby federally, though I'm not hopeful for federal legislation that would address the litigation environment. There are efforts state by state where you do see change, but it's slow and it's more modest. Litigation funding comes in a variety of guises. Some that are more, I think, predatory and gambling-oriented. There are forms of litigation funding that are truly there to help those who are less fortunate have a means to have a day in court and be heard. There are those in between who do it on a lending basis, not on an equity basis. It's like payday lending, and it ought to be regulated. I think litigation funding has to be examined in a more careful way, and efforts to promote both, on one hand, disclosure and transparency, particularly in the courtroom around who's funding, and efforts around legislation or regulation that manages litigation funding, which is a growing investing class and a growing source of frequency and severity of suits. I think it's an important effort as well. Okay. Thank you for that, Evan. Another topic that's come up quite a bit in our conversation with investors, as well as been a frequent discussion with insurance executives as well, is the topic of climate change. I guess as you think about that topic, how is the phenomenon of climate change influencing both your underwriting as well as your investing decisions for the company? We have a clear view at this time of how we approach our responsibilities in climate change. On one hand, we and society has, I should say, competing priorities that are intentional. On one hand, we have an obligation and both personally and corporately to support the globe towards moving towards net zero. I'll come back to that and all that we can do that way. On the other hand, we have an obligation to also support energy security and to support society in what is lawful. That's expected of an insurance company, and we're a regulated business, and we're expected to execute our responsibilities that way also. We have both. Chubb has not declared ourselves to be net zero because we can't imagine as a company how we can actually achieve that. I said it a moment ago that ability to measure the carbon footprint of our portfolio, we don't know how to do that. No company knows how to do that. Until we know how to do that and we see a realistic path to it, we can't really declare ourselves net zero. On the other hand, our job to develop product, which we are actively doing to support industries that are either helping companies and individuals reduce their carbon footprint or create new technologies that produce energy that are carbon-free. We are ensuring those activities and developing more technical ability to do that. In our investment portfolios and investment activities, we are investing in and more and more investing in new technologies that will advance carbon neutrality. We're continuing, on the other hand, to insure oil and gas because the world needs energy. While we're not doing things like coal and tar sands that are where there's other options and those have true sustainability issues with them, and there are alternatives, we don't yet have great alternatives to gas and oil, and it would be irresponsible of us not to continue to insure those in a responsible way. We're trying to develop an ability to underwrite new projects in a scientific-based way where we can determine which ones are done in a more sustainable and responsible way and insure those while we may not insure those that are less so that way. We're trying to find that balance. Finally, our job is to provide more resilience-related services to help people while they face carbon-related weather until the world transitions, and we're working on services in that regard. It's pretty holistic and balanced. Okay. The next topic I want to go into is the area of digitization. I think every year at the conference, we try to spend a little bit of time thinking about kind of the future of insurance and how things are evolving within the business model. You've been pretty outspoken on the topic of digitization, and I think you suggested that it's not the future, but it's kind of the here and now. I'd like to get your thoughts in terms of the steps that you're undertaking to digitize your business model as well as kind of your priorities over the intermediate term. Yeah. Look, I'll speak a little bit about that without giving others a roadmap. The tools and the technologies and the capabilities that the era of digitization has brought are here and now to improve how every insurance company does its business. To varying degrees, companies are embracing these. Whether it is technology related to the customer experience, whether it is data that is related to the sales and the service experience of a customer, and the ability to data-scrape and to use data insights, both internal and external, to make it simple for a customer and seamless. Whether it is used in the underwriting and the discrimination of one risk versus another and to gain better insight. Whether it is data to be used and the tools and analytics around it in claims, in claims insights, the holistic view of the process. All of that capability exists today and is evolving rapidly. Companies are embracing it to varying degrees and in varying ways. It is the here and now. The skill sets that companies now must employ to take full advantage of what a digital age offers is the here and now. It's not simply underwriting, but it's engineering, and it's data management, and it's analytics, as an example. The ability to not change what we do, which is take risks and underwrite and manage risk, but the how we do it has the ability to be far more efficient and insightful and creative around the how we do. The organization management changes that now can be employed in how we're organized and manage around those skill sets, along with traditional skill sets, so the cycle of iteration is faster and more dynamic. All of that is today, because we're in a digital age that actually allows and provides for the freedom to remake ourselves that way. Whether it is an insurtech that starts from scratch or it's a major incumbent insurer that recognizes, embraces, and knows how to manage change within an organization, that age is here right now. Actually, it's happening more rapidly in places like Asia and Latin America than it is in the U.S., but it's happening in the U.S. just as rapidly. We're iterating between digital businesses and how we transform existing businesses. That's the future. That's the future of this industry. Okay. With that, I want to maybe turn our attention to M&A and just any general thoughts you have about the M&A environment. Yeah, I'm not buying anything. That was a joke. The M&A environment. We're in a period where pricing is quite good. Companies overall in the industry are generally doing quite well. The cost of money is going up and will continue to go up, particularly as the Fed fights inflation, unwinds QE. That is going to, on one hand, have an impact on valuations and bring them down in some areas. You've seen that in insurtechs. That may drive some M&A on the margin. On the other hand, I think more M&A is going to take place. I can't predict among large companies, but among smaller and medium-sized companies, particularly as we come out of the cycle, the hard part of the cycle, over time, I have no doubt that'll spur greater M&A as companies want to continue to grow and show strength. It's usually the way of the industry. Okay. I think maybe the last question, I think we've got maybe about a minute and a half left, Evan, is just on the topic of private equity. In our day one of our conference, there's a number of questions around the growing role of private equity in the insurance space. Any thoughts you have about this emerged phenomenon? Yeah. Private equity has always been active in the industry, particularly around here and there at brokerage and intermediation end of our business. Private equity has been active for decades now. Just a lot more have become active in the last 10 years. There's always been a presence. Private equity, to a degree, in the property casualty business. The phenomenon that has, I think, been the greatest change over the last 10 years or so has been private equity's involvement in the life business, where they look for, frankly, captive assets, investors, to be able to manage money, and be able to manage and diversify the portfolios to more illiquid, or to arbitrage between higher octane liquid and particularly debt-related instruments and the guarantees they provide on the front end. That has been a phenomenon. I think some private equity is doing it in a more responsible way than others are. We've been in a pretty benign period, the only thing I hope is that as we go into what I do believe is going to be a period of greater volatility and more market stress than we have seen so far, I just hope it doesn't lead to trouble in some of these entities that are run by private equity right now. On the other hand, private capital, as we all know, has found its way into the underwriting side of the business, particularly in the catastrophe reinsurance side. I do believe some of that capital that was in hunt of a return, particularly in a low for longer yield environment, has now had a taste of the truth behind models, that models are only an organized way of thinking. They hardly provide absolute truth, buyer beware of basis risk. With climate change, I think they've gotten a lesson in that. I've noticed of late there just is not as much private capital attracted to that business, the growth of it has slowed down significantly. By the way, the price they want looks pretty much like the price that the buy and hold reinsurers want for the same risk. Hard to believe. I think, Evan, that brings us to the bottom of the hour here, on behalf of S&P, as well as the audience, I'd like to thank you for your time and sharing your insights today. Thank you so much, Larry, good to be here, I wish you a great conference. Thanks so much. With that, I'll turn my attention to my colleague, Brian Sozzi, who will lead a panel with our fellow CEOs from the P&C industry.