COVID-19 Costs Push Chubb to $331M Loss in Q2

By | July 29, 2020

Chubb lost $331 million compared to net income of more than $1.1 billion during the same quarter in 2019. In the 2020 first quarter, Chubb reported $252 million in net income, but that was down from more than $1 billion the year before, largely due to financial market volatility stemming from the pandemic.

Much of the second quarter damage came from net catastrophe losses of $1.5 billion after tax; COVID-19 caused $1.2 billion of that total. Chubb cautioned that the number represents its “best estimate of ultimate insurance losses resulting directly from the pandemic and consequent economic crises.”

Chubb Chairman and CEO Evan Greenberg didn’t sugarcoat the results.

“It was a difficult quarter for Chubb as the COVID-19 global pandemic, an event of historic proportions, impacted both our earnings and growth, and overshadowed the core underlying strength and vitality of our company,” he said in prepared remarks.

Even as COVID-19 struck hard, Greenberg noted that the insurer still continues to have notable successes, such as adjusted net premiums written for commercial P/C growing more than 9 percent. He said also that Chubb is growing its exposures and market share, “taking advantage of commercial P&C underwriting conditions where rates in many classes continued to rise in North America” and in Chubb’s international operations.

Still, COVID-19 had a powerful impact.

Chubb’s P/C combined ratio was 112.3 in Q2, versus 90.1 in Q2 2019. The result carried 23.9 percentage points of catastrophe losses, compared with 3.8 percentage points a year. The insurer said its consumer businesses including accident and health, travel and personal lines all took hits due to the pandemic’s effect on consumer activity.

Other Q2 results:

  • Chubb reported a P/C underwriting loss for the second quarter of $929 million, compared to a $727 million underwriting gain in the 2019 second quarter.
  • Net premiums written for P/C surpassed $7.7 billion during Q2, about flat compared to the same period a year ago.
  • Global P/C net premiums written excluding agriculture also stayed flat at approximately $7.3 billion year-over-year. Underwriting losses for the unit surpassed $960 million, versus a $689 million underwriting gain in the 2019 second quarter.
  • North America commercial P/C insurance net premiums written were $3.7 billion for the quarter, up from $3.5 billion a year ago.
  • Pre-tax net investment income was $827 million, with adjusted net investment income at $857 million. Chubb said that this was below the guidance range due to foreign exchange, lower rates on floating rate obligations and an acceleration of mortgage loan prepayments.

Source: Chubb

About Mark Hollmer

Hollmer is a veteran business journalist and editor of CarrierManagement.com's daily e-newsletter for the property/casualty insurance industry C-suite. He may be reached at mhollmer@carriermanagement.com. More from Mark Hollmer

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