Chubb likes property as ‘best priced’ line, selective on casualty

Chubb is ready to lean into property and property cat, what it considers “the best-priced business in the world right now,” while remaining selective in casualty, even pulling back when pricing looks inadequate vis-à-vis litigation trends, CEO Evan Greenberg has said. 

Commercial P&C underwriting conditions “remain broadly favourable around the globe” and pricing “continues to exceed or keep pace with loss costs in most of our major product areas,” Greenberg told shareholders in his annual letter. 

But not all lines are currently trading equally, and Chubb leans towards property and away from a handle of poorly priced casualty lines. 

“Property business is the best-priced business in the world right now, and as long as we are paid adequately, we have the balance sheet to take greater concentration and volatility in earnings from property,” Greenberg said. 

Climate change, the reinsurance market's 2023 reset and the end of cheap money all help guarantee the hard market in property has legs, Greenberg argues. Climate brings volatility, heightened reinsurance attachment points put non-tail risk back with primary carriers and the end of cheap money disciplines alternative capital. 

“Favourable property insurance underwriting conditions in most areas of the world should endure,” Greenberg concluded. 

Casualty may be less clear of a story. “Conditions overall have been favourable,” but Chubb can afford to be “more selective” by client, class and territory in what Greenberg considers a fast-changing marketplace.  

As of today, key areas of directors and officers (D&O) and employment practices (EPLI) “are simply underpriced.”  

Those lines are subject to rising frequency of class action lawsuits with rising severity to boot. EPLI awards are also rising, Greenberg claimed. 

Watch also casualty lines, “especially around anything with wheels” such as commercial fleets, transportation and logistics. 

Chubb knows how to walk away and is watching the full swathe of liability lines subject to troubling litigation trends. Greenberg laments sour societal attitudes toward business, the litigation finance industry, and rising severity of liability awards

“We will underwrite casualty with the legal environment as we know it,” Greenberg said. “That means at times shedding revenue when we can’t make a profit.

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