Evan Greenberg, Chief Executive Officer (CEO) of global insurer Chubb, has emphasised that the carrier is not shying away from the reinsurance business, but that it makes more sense for the company to grow its insurance property catastrophe-related exposure than on the reinsurance side.
Chubb recently held its third quarter 2023 earnings call after reporting a solid set of results for the period, which included a significantly improved underwriting performance within its P&C business.
During the call, CEO Greenberg was questioned on the firm’s reinsurance business, and how he sees pricing evolving over the next year.
“Last year, in the third quarter, so just to level set, there were, as you know, much larger cat events. And so, we collected a lot of reinstatement premium last year in the third quarter, and we didn’t have those level of cat events this year. So, if you adjust for that, our reinsurance business actually grew in the third quarter by 20%. We’re not running away from the reinsurance business,” said Greenberg.
He went on to explain that for Chubb, it’s a better trade to grow its insurance property catastrophe-related exposure than it is to do it through its reinsurance operations.
“And so, we have put much more capital, are taking more exposure on the insurance side where we’ve got great transparency, we’ve got great distribution reach, we’ve got underwriting expertise up and down the food chain, from personal lines to small commercial, to large industrial commercial to E&S, across North America, across the globe,” said Greenberg.
In terms of reinsurance pricing, Greenberg said that the company will see what the January 1st, 2024, reinsurance renewals produce.
“If we liked the risk-adjusted returns on a relative basis to insurance, then we would lean in and do more in the property cat area, but the money’s not burning a hole in our pocket by any means,” he said.
Greenberg also commented on the casualty reinsurance space and explained that the challenges in this business are nothing new to Chubb’s insurance or reinsurance operations.
“And so, we’ve been very, very cautious and we’ve shrunk our market share significantly. If casualty re improves to a point where it reflects the environment and you can earn a reasonable risk-adjusted return, you’d see us write more there.
“Other than that, we’ve got plenty of handles to pull in Chubb, and we remain patient and cautious. It’s the only way to outperform in the insurance business, as far as know, overtime,” said Greenberg.
