latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/chubb-pulling-back-sharply-in-california-ceo-blames-price-inadequacy-67294343 content esgSubNav
In This List

Chubb pulling back sharply in California; CEO blames price inadequacy

Blog

Banking Essentials Newsletter 2021: December Edition

Blog

Insight Weekly: US stock performance; banks' M&A risk; COVID-19 vaccine makers' earnings

Blog

Automating Credit Risk Surveillance Using Statistical Models

Video

S&P Capital IQ Pro | Powered by Expert Insights


Chubb pulling back sharply in California; CEO blames price inadequacy

Chubb Ltd. is significantly reducing its homeowners insurance exposure in wildfire-prone areas of California because it cannot get sufficient rate increases to balance out the risk, according to the insurer's top executive.

Chairman and CEO Evan Greenberg said during a conference call to discuss third-quarter earnings that Chubb was shrinking its footprint in areas of the Golden State "both highly exposed, and even moderately exposed, to wildfire."

He placed the blame on decisions made by California that have led to it being unable to achieve "adequate price for the risk, and not by a small amount."

"Someone else will have the pleasure of writing that business, unfortunately," Greenberg said.

According to S&P Global Market Intelligence data, Chubb was the 11th-largest homeowners underwriter in California in 2020 and 2019, with direct written premiums of $278.7 million and $267.5 million, respectively, in those years.

The company in an Aug. 20 rate filing with the California Department of Insurance said it had undergone nonrenewal initiatives in 2019 and 2020. Chubb since then conducted a third nonrenewal initiative, impacting "less than 350 locations," saying mitigation efforts would not be useful because of the "extreme exposure to wildfire" in those areas.

Rate growth to continue

Greenberg expects a "robust" pricing environment to continue in the commercial property and casualty market, citing the company's 22% increase in commercial premiums for the quarter. Overall, P&C premiums were up 17% for the quarter and 14.2% for the first nine months of 2021, which Greenberg said was the best organic growth the company has experience since 2004.

"The industry should continue to achieve rate in excess of loss cost for some time to come," he said.

Greenberg also said he views an infrastructure bill being debated in Congress as a benefit for Chubb and the insurance industry because the projects contained in the legislation would need to be insured.