Chubb Ltd. sees strong underwriting conditions everywhere but financial lines and certain excess and surplus lines, where competition and regulatory restraints are a burden, said its chief executive officer.
For Chubb, prices increases in the quarter for both property and casualty exceeded loss costs in both North America and the international division, said Chairman and CEO Evan Greenberg in a conference call. Rates and prices continued to fall worldwide in financial lines, led by directors and officers, Greenberg said. The financial lines underwriting environment “remains aggressive,” particularly in D&O coverage, he said.
Greenberg said in financial lines, “when all that naïve capital gets tired” clients may look to Chubb as market losses rise. He said “good luck” to many carriers and brokers while “we’ve got plenty else to do.”
Chubb’s large corporate commercial division for major accounts grew only 1.4%, adversely affected by underwriting actions taken in a segment of the primary and excess casualty business, Greenberg said.
The group expects to return to more robust growth in the first quarter for its large and middle market and excess and surplus lines, he said.
Excess casualty remains subject to an external litigation environment in North America that targets large corporates, said Greenberg, noting the trial bar does that because that’s where the money is.
There has been a trend of increased frequency and severity exposure that hits both primary and excess casualty lines, he said. This trend has become acute with exposure to “anything that has wheels,” such as logistics, trucking and fleets. The larger the vehicles in the fleets, the greater the target, he said.
In the North American market, Greenberg said Chubb is writing more excess and surplus business, which is growing rapidly and will continue to do so. Chubb prefers to first offer a customer admitted business “but where the states and regulation don’t allow is to tailor coverage for those who are exposed in a more outsized way to catastrophes,” affluent customers “who want to live on the edge of civilization” will be priced on an E&S basis, he said.
Greenberg said he wishes there was more flexibility within regulatory jurisdictions to provided admitted coverage.
Regarding geopolitical risk, Greenberg said he doesn’t believe Chubb’s exposure is any greater in Europe than in the United States.
In Asia, he said he doesn’t believe the United States and and China are going to war, but there is always risk in Asia related to North Korea and Taiwan if someone makes a mistake. If there is such conflict, he said he believes it would lead to a global issue rather than local.
Fourth-quarter net income rose to $3.30 billion from $1.31 billion. Net premiums written rose to $11.60 billion from $10.23 billion. The property/casualty combined ratio improved to 85.5 from 88.0. Net income for 2023 rose to $9.03 billion from $5.25 billion.
Chubb saw $300 million in pretax catastrophe losses for the quarter, related mainly to weather events, said Chief Financial Officer Peter Enns said in the call. About 54% of these losses were in the United States.
The corporate runoff lines had adverse development of $146 million pretax including $99 million related to asbestos, Enns said.
The group had a one-time $1.14 billion deferred tax benefit in the quarter as a result of the Bermuda income tax law enacted in December, Enns said. The one-time represents a permanent increase to book value to be realized over 10 years starting in 2025, he said.
Consolidated NPW rose by double digits, with P/C premiums up 12.5% and life premiums up 20%, Greenberg said.
P/C growth was spread broadly across lines and geographies, particularly North America commercial NPW, Greenberg said.
P/C underwriting income hit a record in the fourth quarter and Chubb saw a 50-50 balance between underwriting and investment income, he said.
Life insurance income also saw strong growth, led by Asia, Greenberg said.
Double-digit international P/C growth was led by Asia as well, with premiums up 37% led by commercial lines growth of 21% and consumer lines up 56%, he said.
Underwriting entities of Chubb Ltd. have current Best’s Financial Strength Ratings ranging from A++ (Superior) to A- (Excellent).