ACE CEO Says Commercial Soft Market to End
Evan Greenberg, chief executive of Ace Ltd., during the Zurich-based company's third-quarter earnings call Wednesday, said that "the end of the soft market in insurance has arrived. According to Greenberg, premiums charged in most lines of commercial insurance have abruptly stopped falling and will gradually start to rise.
The year began with an overcapitalized industry and a soft market, Mr. Greenberg said, but catastrophes and financial-market declines have drained capital and are beginning to drive a need to raise premiums. The cost of debt and equity capital has "soared," making it far more costly to replenish depleted capital, he said.
He said that Ace remains well-capitalized and will be "one of the winners" as the market contracts, and may make acquisitions. He said that the company has a clear strategy and will only make acquisitions "that make sense for shareholders."
Greenberg also said during his call that the company is seeing opportunities from American International Group Inc.'s (AIG) troubles. He declined to say if ACE was poring over assets that AIG is putting up for sale to repay the government loan.
"We have seen, so far in October, as many submissions as we saw all of the fourth quarter last year," said Mr. Greenberg, a former AIG executive and a son of Maurice R. Greenberg, who was AIG's CEO for nearly four decades.
Published on October 30, 2008
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