Some Large Accounts Start Seeing Chubb’s Back as it Focuses on Middle, Small

The global middle market and small commercial is where it’s at for Chubb, according to its CEO.

“The pattern of growth and opportunity continues,” Evan G. Greenberg said on a call with analysts to discuss Q2 earnings. “It’s where we’re leaning in, and we see more opportunity.”

“The themes are durable. It’s around middle market and small commercial,” he continued. “We are so deep in those markets. I expect it to continue to expand. I expect that [double-digit] growth to not only continue—I expect in time for that to accelerate and to do better.”

Greenberg spoke not only of the U.S., where he said Chubb is the second-largest middle market writer, he talked about markets such as Australia, Korea, Malaysia, Thailand, Singapore and Taiwan—as well as others in Asia, Latin America and Europe. There are “lots of new businesses, and not just new businesses, but new industries as those economies develop,” he said.

In a statement at the release of second quarter earnings, which saw net income up 33% and consolidated net premiums written up 6.3%, Greenberg said the commercial underwriting environment for large account retail and E&S property-related business “has grown much more competitive with rates dropping, though terms and conditions remain steady,” During the call, the chief executive said, “A lot more capital is chasing the property business and prices are softening.”

He added: “While others are leaning in, we’ve begun walking away where necessary.”

Conversely, middle market and small commercial accounts are “much more disciplined and orderly,” and Chubb is “growing property in this area,” Greenberg said.

FEMA phased out?

During the call, Greenberg was asked if a potential phase-out of the Federal Emergency Management Agency (FEMA) would affect Chubb’s solid high-net-worth business, and if the insurer would consider writing flood to support the book. FEMA is the administrator of the National Flood Insurance Program (NFIP).

“No,” Greenberg said. FEMA “provides a relatively modest limit” that really does not make much of a difference to the HNW client when considering home values.

“FEMA gives you [$250,000, the maximum building coverage under NFIP] or so of coverage,” he explained. “It doesn’t move the needle.”

As for the private flood insurance market, Greenberg said it “has been growing” and Chubb is part of it. “It’s on a selective basis with, frankly, better mapping and underwriting than FEMA’s.”

On the potential dissolution of FEMA, which has repeatedly been mentioned as a goal by the Trump administration, Greenberg said, “I think it’s bad for the country. I would restructure FEMA and how it provides coverage.”

“I would not provide the same coverage to the same individual to rebuild and rebuild and rebuild in the same flood zone,” he continued. “As a first loss in flood for people who have no other choice from a social perspective, I would keep it.”