Chubb’s NA commercial P&C price increases slow in Q1, loss cost trend declines 'modestly'
(The Insurer) - Chubb’s commercial insurance price increases decelerated in the first quarter while there was also a modest decline in loss trend, with the insurer’s CEO Evan Greenberg also commenting that he is “mindful” of tariffs affecting short-tail lines.
Speaking on an investor call on Wednesday, Greenberg said Chubb had a “good” first quarter considering the significant catastrophe losses from the California wildfires.
After markets closed on Tuesday, Chubb reported $3.68 of operating income per share for the first quarter, beating the $3.19 consensus estimate of 26 analysts but down from the $5.27 a share recorded in Q1 2024.
The combined ratio deteriorated by 9.7 percentage points to 95.7%. Catastrophe losses increased to $1.64 billion, including $1.47 billion from the California wildfires, compared with $435 million in the first quarter of 2024.
New York-listed Chubb’s share price was down 1.6% as of 10:40 a.m. ET on Wednesday, compared with the previous day’s closing price of $290.42.
The insurer’s P&C net premiums written totalled $10.93 billion, up 3.2% from $10.59 billion in the prior-year period, or 5.0% in constant dollars.
On the investor call, Chubb chairman and CEO Greenberg said: “In terms of the commercial P&C underwriting environment, large account-related short-tail business, both admitted and E&S, is growing quite competitive. A lot more capital is chasing the business, and prices are softening.”
In contrast, Greenberg said that middle market and small commercial property for both admitted retail and non-admitted wholesale E&S “remain much more disciplined and orderly”.
“Rates, in fact, continue to rise, and we are growing in this area,” he said.
Casualty continues to firm in all areas that require rate for retail and E&S, Greenberg added, but large account middle market and financial lines remain soft.
Chubb’s overall North America commercial pricing for property and casualty, excluding financial lines and workers’ compensation, was up 8.3% in the first quarter, with rate change of 6.4% and exposure change of 1.8%. This was down sequentially from the 9.9% increase in Q4 2024, with rates up 8.2% and exposure change of 1.6%.
Property pricing was up 3.1% in the first quarter (down from 6.9% in Q4) with rates down 0.7% offset by exposure change of 3.8%. Property pricing was down 9.6% in large account business and up 10.2% in middle and small, both admitted and E&S.
Casualty pricing in North America was up 13.4% (12.7% in Q4), with rates up 12.6% and exposure up 0.7%. Financial lines pricing was down 3.2%, with the change all from rate.
Primary workers’ compensation pricing was flat, while large account risk management workers’ compensation was up 7.5%.
Greenberg said that the North America commercial selected loss cost trend has “declined modestly” from 6.8% in 2024 to 6.5%, with casualty running at 8.9% and property 4.5%. The executive said that the casualty loss cost trend in aggregate in long tail is up modestly.
“We are mindful of a potential impact tariffs could have on short-tail lines of business and are watching closely,” Greenberg said.
In North America consumer business, homeowners pricing was up 12.5% in the quarter and ahead of loss costs, which are running at 8.7%.
In the international retail commercial business, P&C pricing was up 2.6% and financial lines pricing down 5.5%.
Discussing tariffs, Greenberg said there is a “great deal of uncertainty and confusion surrounding our government's approach to trade”, which is affecting business and consumer confidence.
“The odds of recession have risen substantially and higher inflation is all but certain to what degree is an open question,” he said.
Greenberg said he hoped agreements can be reached on trade to reduce or eliminate tariffs and reconcile priorities quickly.
“Certainty and predictability are jacks to open for confidence, growth and the image of our country as a leader, a reliable partner and a place to do business,” he said.
