“The rate environment is naturally becoming a bit more competitive, particularly in certain casualty-related classes as more carriers seek to now grow,” said Greenberg during the July 27 call with analysts. “The market is reasonably disciplined, and I expect it will remain so given not only the specter of loss cost inflation, but the presence of other risk exposures such as climate change, the war in Ukraine, the litigation environment, cyber, and the overall cost of reinsurance. Plenty of reminders to managements to get paid for the exposure underwritten.”
Loss costs for short-tail lines in North America are expected to trend up to 7%, while long-tail are trending at 6.5%, Greenberg said. Though Chubb is currently charging adequate prices, rate increases remain necessary to keep pace and be “vigilant.”
“The insurance business classically lags. And rather than be lagging and get caught … we've all been through this a number of times in inflationary periods … it’s to anticipate ahead,” he said.
Greenberg said he felt “reasonably confident” on the market’s direction, although he added, “on the margin, there are people doing dumb things.”
Greenberg reported North American P/C premium growth of 10.9% in the quarter ended June 30, with commercial premiums up 12.6% and personal up 5.4%. North American commercial lines saw rates increase 7%, with pricing (including rate and exposure) increasing over 10.5%.
In individual lines of business, Chubb’s general casualty rates were up almost 13%, while property rates rose 9% and financial lines were up nearly 7.5%.
Greenberg also cited “record new business activity” on Chubb’s North American high net worth personal lines business, with net premiums up 4.7%.
Chubb had a “simply excellent” quarter, Greenberg said. The insurer reported record P/C underwriting income, up 21.1% to $1.44 billion, and a combined ratio of 84%. For the full first-half, Chubb hit new records for both underwriting income at $2.72 billion and combined ratio of 84.2%.
On net income, Chubb slid 46% to $1.22 billion down from $2.27 billion in the prior-year quarter. The insurer attributed the loss to after-tax losses of $565 million “due to mark-to-market impact on private and public equities and from sales in fixed income securities.”
Losses related to the Russia-Ukraine conflict are “not large enough to call out,” Greenberg noted. Chubb has exposure it is “watching and observing,” he added, but said he is “comfortable” they are considered in the firm’s loss expectations.