Chubb Ltd.witnessed market conditions that grew incrementally more competitive during thefirst quarter, in line with internal expectations.
Consistent with commentary provided earlier in first-quarterearnings seasons by peer carriers and brokers, Chubb Chairman and CEO EvanGreenberg identified shorter-tail lines of business as a particularlycompetitive area during a conference call.
"It really varied depending on the territory, line ofbusiness and size of risk," he said. "As noted in prior quarters,large account business, particularly shared and layered, [was] more competitivethan midsized, and wholesale is more competitive than retail and property iscertainly more competitive than casualty-related, although casualty pricing inthe main is not keeping pace with loss-cost trends. None of this is a surprise."
Greenberg added that large middle-market commercial pricinghad been "marginally better" than Chubb had anticipated;major-accounts pricing was in line with expectations.
Chubb reported strong renewal retention rates during thefirst quarter, but P&C net premiums written declined on a pro forma,constant-dollar basis by 1.4% year over year, according to an . Greenbergsaid the unfavorable comparison primarily related to new business, but heemphasized that the company has built momentum in that regard since the Januarycompletion of the mergerof the former ACE Ltd. and Chubb Corp.
"We had improved new business growth in March and thenApril," he reported, later citing several factors for sluggish newbusiness activity in January including typical seasonality and the impact ofthe "mountain of execution" associated with the merger's completionin causing staff to have "some time away from working on new business."New business writings were particularly slow in property-related business,which Greenberg said reflected the combination of market conditions and "merger-relatedfocus," but he added that activity had picked up in March and April inthat area as well.
Greenberg said the response to the combination from keyconstituencies, including agents and brokers, has been "really great,"and he highlighted the reaction the new Chubb received at the RIMS AnnualConference in San Diego in April as evidence of the market's enthusiasm.
"We were really popular kids on campus," herecalled.
The company expects to shrink net premiums written in certainportfolios in both 2016 and 2017 as part of a strategic decision to reduce netcapital-related exposures or because it believes it will not be able togenerate adequate underwriting returns.
"I will shed revenue without a tear in any class, inany line of business where we can't make an underwriting profit, period,"Greenberg said, adding that "there are times that revenue [growth] is forvanity." He said Chubb's underwriting discipline is "absolutely"impacting the company's rate of growth, as in addition to the merger-relatedparing of business, the company has been taking its "usual underwritingactions" as market conditions warrant.