Strong insurers should pick up business from weak rivals
Chubb chief executive John Finnegan said the US government’s bailouts of struggling rivals have harmed Chubb by stopping it winning business from the bailed out AIG, Bloomberg reports.
“The opportunities for financially strong companies to absorb the business of weakened competitors were initially compelling,” Finnegan said in the annual letter to shareholders.
“This is as it should be in a free market unimpeded by federal intervention. But the willingness of the federal government to prop up weakened competitors by artificially injecting capital is troubling.”
Profits to decline
Finnegan repeated that Chubb expects earnings to decline this year. The insurer said in January that it expects 2010 operating earnings of $5.15 to $5.55 a share, compared with $6.18 in 2009. The profit is expected to be $5.39 a share, the average estimate of 22 analysts surveyed by Bloomberg.
“We expect 2010 to continue to present major challenges for the industry,” Finnegan said. Difficulties will be “exacerbated by the likelihood that catastrophe losses will increase this year to levels more in line with historical experience.”
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