Industry executives who describe insurance and reinsurance markets as “rational” in the not-so-distant past are now using words like “dumb” and “bizarre” to characterize soft-market competitor moves happening faster than expected, and in unusual places.
W. Robert Berkley, Jr., chief executive officer and president of W.R. Berkley Corporation, began his opening remarks on a first-quarter earnings call last week
by highlighting “a notable shift in the appetite of the standard market” over the past 90 days. Print
particular, national carriers seem to be broadening their appetite, he said, juxtaposing this observation against remarks he made in recent prior quarters about competi
tion coming from MGAs, MGUs—entities with delegated authority—backed by capacity from the reinsurance market and from Lloyd’s.
Related: ‘We’ll Have to See How This Plays Out,’ Says CEO Berkley on MGA Competitors
Competition from standard markets has “reached a new level… that we haven’t seen in some n
umber of years,” Berkley stated, adding, however, that it “tends to be focused in certain pockets.”
Which ones?
“They are active on the property side. And to the extent that it’s on the casualty side, consistent, it’s been in pockets of the casualty market that are OK but not great,” he re
sponded to an analyst later asking for this detail. “It’s really bizarre. They’re not going after the good stuff. They’re going after the marginal stuff,” he said of the standard national carriers.
Even more “bizarre” in Berkley’s view: “In some cases, they’re taking it for 30% off, [when] they could have had it for 10% off,” he said.
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A day later, Evan Greenberg, chair and CEO of Chubb, said he wasn't seeing exactly the same pict
ure of admitted markets competing on E&S business but wouldn't be surprised to see more of it
. “It’s a classic pattern in softening market. Where I’m seeing it is more on
the margin on the property side—retail that will all of a sudden get so excited to write habitational wood-frame business in Texas.”
“OK. Good luck to you,” he commented.
Many of Greenberg’s remarks were more focused on MGAs incented on volume that are impacting the property insurance market—especially large-account share
ed-and-layered property, retail and wholesale in North America and wholesale in London, which Chubb has been moving away from because of irrational competition.
Related: ‘The Arms Race Is On’: Chubb’s Greenberg on Mythos, Middle East | Chubb Q1 Net Income Increases 74% on Fewer Catastrophe Losses
Chubb’s leader began his conference call commentary with a broad overview statement alluding to this: “In a number of important markets, property and financing
ncial lines pricing conditions are soft, with property pricing in those markets softening at a pace that, frankly, I'll only describe as dumb.”
He went on to highlight Chubb’s top-line growth figures, with and without large account shared-and-layered property business. Chubb shrunk that business, he s
aid, highlighted, for example, that “major accounts retail and E&S wholesale” premiums in North America grew just 1.5% in the first quarter—but it jumped by 10.9, ex
cluding the shared-and-layered property accounts shed in the quarter.
“Going a step further, property pricing was down 14.3% on shared-and-layered major [accounts] business [that] we wrote. Market pricing for the business we gave up or passed on was down between 30% and 40%….
