Chubb CEO Evan Greenberg threw cold water on any expansion of the insurer’s property catastrophe book beyond its current targets post Hurricane Ian, telling investors that he see no signs of change in the pricing environment.
“We are fully prepared to take cat risk and the associated volatility. After all, it's what we do for a living,” Greenberg said on Chubb’s third quarter earnings call Tuesday. “As long as we are adequately compensated and the concentration of exposure is within our balance sheet wherewithal. In my judgment, current pricing for cat is inadequate in many portfolios, and property pricing should continue to adjust to the realities of the nat cat environment.
In response to an analyst question, Greenberg placed Chubb’s property catastrophe risk at 16% of the insurer’s book of business and said that he sees not signals in the market to expand it beyond that percentage, saying that any capital will be deployed whiting that range and “globally” within markets that show adequate pricing.
“We have a finite balance sheet, so we can only take so much concentration in any one geographic area when you imagine that the PML or the loss -- that concentration will produce over certain return periods against your capital. And then it's simply the question, are we paid adequately for the risk and for the volatility we take,” Greenberg said, adding that increased reinsurance prices also are limiting Chubb’s catastrophe appetite.
Greenberg said Hurricane Ian was a “large event distinguished by its size, wind speed and amount of water, both surge and flood” but that Chubb models already anticipate a Category 3 or greater event striking “Florida about every 3 years. “