Macquarie sees potential Chubb-AIG merger as floor for Aussie commercial rates

Analysts at Macquarie say a merger of Chubb CB.BN and American International Group AIG.N could help put a floor under Australian commercial insurance premium rates, even if it does not reverse the broader downtrend

Media reports emerged earlier in the month that insurance firm Chubb had made an informal approach for AIG

Macquarie says talk of a potential Chubb–AIG deal highlights mounting pressure on global insurers as commercial premium rates roll over, a backdrop that keeps downside risks for earnings in focus

Combining the sixth- and eighth-largest players in the Australian market would modestly reduce fragmentation in a sector with 40 APRA-regulated insurers, easing competitive intensity at the margin - Macquarie

Brokerage adds merged group would rank third in Australian commercial lines, but overall concentration would remain low, limiting any step-change in pricing power

The Australian insurance sector is currently dominated by companies including Insurance Australia Group IAG.AX, QBE Insurance QBE.AX, Suncorp SUN.AX and Allianz ALVG.DE