Greenberg on financial line trends: ‘in a word, simply dumb’
Select financial lines continue to defy good sense, pricing well below and in defiance of loss cost trend, the CEO of US P&C carrier Chubb, Evan Greenberg has claimed.
“The underwriting environment, in a word, is simply dumb,” Greenberg told his company's first quarter earnings call, citing price indications down neighbourhood 3% against loss cost trend at a positive 5%.
Greenberg is seeing cases across public company D&O, some non-profit D&O and employment practices liability, in many cases sewn across both large accounts and mid-market.
Rival D&O players appear “irrational and dumb” and Greenberg foresees a series of eventual wake-up calls on mis-priced deals that Chubb knows better than its rivals.
“We are the largest writers of this business; we know what the experience is, what the exposures are, where losses are coming from,” Greenberg said.
In employment practices, “many are very naive and don't understand the trends and the exposures that are driving EPLI and where it is being driven,” Greenberg says. Conditions may vary wildly and evolve rapidly with legal changes and differences across jurisdictions, he warns.
Chubb will continue to back off in turn. “In some places we are just not going to follow people off the cliff,” Greenberg said. Q1 growth in Chubb’s US commercial segment told the same story: P&C lines rose 13.0% against a 7.6% decline for still-troubled financial lines.
Within the larger casualty arena, Chubb is generally pleased with market conditions, save for worries in commercial automotive and logistics, what Greenberg has previously defined as “anything on wheels.”
Chubb’s Q1 US casualty lines enjoyed a 13.1% pricing gain, including 10.9% on rate and 2% on exposure, a handy beat to loss cost trend, Greenberg insisted.
“The vast majority of our book is adequately priced in casualty and we are getting rate that is recognizing loss cost trend and so we maintain the adequacy,” Greenberg told analysts.
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