Ace Ltd. CEO Evan G. Greenberg gave a full-throttle endorsement for the renewal of the Terrorism Risk Insurance Act, saying without it there would be little or no terrorism insurance in the market.
“I think from any rational point of view, TRIA is really a no-brainer to renew,” says Greenberg (pictured at left) during a conference call to discuss the insurer’s first-quarter earnings. “It provides a backstop of certainty that allows businesses to continue on.”
“It is not a benefit to the insurance industry; it is a benefit to business overall” he adds. “If it wasn’t for TRIA, you wouldn’t see much terrorism insurance sold.”
Greenberg says Washington’s current political climate could prevent Congress from reauthorizing the act, but that would be a terrible mistake.
Insurers, he says, will take a limited amount of risk, dependent on how much reinsurance is available. Capacity would dry up quickly because the risk would be densely concentrated in a geographic area, he notes.
Greenberg says the terrorist bombing of the Boston Marathon would not have an impact on Ace’s underwriting of terrorism. He says the company remains thoughtful in its aggregation of risk and the exposures it writes, as it has since it began writing the program in 2001.
He says the bombing, while not destructive in terms of the magnitude of property damage, non-the-less underscores the importance of TRIA, which “allows insurers to more widely offer and underwrite terrorism related exposures.”
Turning to the company’s first-quarter results, the Zurich-based insurer reports “a strong start to the year,” says Greenberg. Ace recorded a first-quarter combined ratio of 88.2, an improvement of 1 point over last year.
Compared to a year ago, first-quarter net income dropped 2 percent, or $20 million, to $953 million. After-tax catastrophe losses including reinstatement premiums of $28 million, and a drop in net investment income of 2 percent to $531 million, impacted the results.
Net written premiums were up 6 percent during the first three months to $3.8 billion.