Q3 2026 results
| Metric | Result | Change |
|---|---|---|
| Core Income | $1.95 billion | Not stated |
| Net Written Premiums | $11.5 billion | Not stated |
| Combined Ratio | 86.8% | Improved |
| Underlying Combined Ratio | 84.1% | Not stated |
| Net Investment Income | $908 million | Up 7% |
| Catastrophe Losses | $538 million | Not stated |
Guidance and outlook
- We now expect the full year expense ratio to come in a little below 29% for 2026 and about the same for 2027.
- We expect approximately $875 million after tax in Q4 for fixed income NII.
- For 2027, we expect more than $3.6 billion in fixed income NII with quarterly figures starting at around $875 million in Q1 and growing to around $965 million in Q4.
- Effective October 1, we increased the percentage ceded to our cyber reinsurance quota share, which will reduce net written premiums by about $165 million in Q4 and by about $230 million for full year 2027.
How management sounded
Positive (+7 on our -10 to +10 scale). Management highlighted record investment income, strong underwriting results, and confidence in the durability of underlying underwriting income. Management sounded more upbeat than on 48% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Durability of underlying underwriting income
Asked: Analysts asked about the durability of the $5.5 billion underlying underwriting income level into next year.
Answer: Management reiterated confidence in the durability of underlying underwriting income, noting the company is larger and more profitable than historically, with strong competitive advantages.
Reserve development
Asked: Analysts asked about favorable prior year reserve development in Business Insurance and if it included general liability.
Answer: Management confirmed favorability across all lines, including general liability, and noted they remain thoughtful about reserves while respecting long-term loss trends.
Loss cost trends
Asked: Analysts asked if the company was foreshadowing a negative step change in loss cost trends given comments on liability pressure.
Answer: Management stated the loss environment is consistent with expectations with no surprises and no change in their view of loss cost trends.
Expense ratio outlook
Asked: Analysts asked about the expense ratio guidance and if it would remain stable next year.
Answer: Management noted the expense ratio is influenced by variable expenses like commissions and profit sharing, and they are comfortable with current levels.
What to watch before the next call
- The impact of the increased cyber reinsurance quota share on net written premiums in Q4 2026 and 2027.
- The evolution of loss cost trends in liability lines, specifically regarding social inflation and litigation.
- The company's ability to maintain its underlying combined ratio below 86% in future quarters.
