Chubb's announcement of a nearly 7 percent share repurchase authorization has prompted one analyst to question the firmness of property-casualty pricing next year.

Bear Stearns property casualty analyst David Small said the announcement by the Warren, N.J.-based p-c insurer comes in contrast to other companies that are raising equity in anticipation of price increases.

Mr. Small said the move has made his organization more bullish on Chubb. "The company has shown strong operating results over the last few quarters, and the repurchase program should put a consistent bid under the shares going forward," he wrote.

Well-run companies in cyclical industries tend to initiate capital management programs at or near cycle peaks, Mr. Small asserted.

"Given that Chubb is one of the more well-respected underwriters, this announcement may be an indication that management feels there are not enough profitable opportunities to deploy an incremental $1.3 billion in the business," he said.

Despite the fact that much of the capital was released by the sale of Chubb Re, Mr. Small said he also believes the repurchase indicates Chubb may restrict growth in more volatile, capital-intensive lines of business where rating agencies are increasing risk-based capital requirements.

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Does Chubb Move Signal Soft Pricing?

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