COVID-19 hits earnings and growth at Chubb in 'difficult' Q2
Property/casualty insurer Chubb swung to loss in a "difficult quarter" that impacted both its earnings and growth. The insurer recorded after-tax COVID-related charge of $1.2 billion, including insurance losses resulting directly from the pandemic and consequent economic crises.
Chubb reported a net loss of $331 million for the second quarter of 2020, compared with net profit of $1.15 billion in the same period last year. For the first half of 2020, the net loss was $79 million, compared with net income of $2.19 billion for H1 2019.
The net catastrophe losses were $1.51 billion after-tax, including COVID-19 catastrophe losses of $1.157 billion after-tax.
Net premiums written in the quarter were reduced by $191 million from COVID-19 exposure adjustments on in-force policies.
The P&C combined ratio was 112.3 percent, compared with 90.1 percent prior year, including catastrophe losses of 23.9 percentage points compared with 3.8 percentage points prior year.
Evan Greenberg, chairman and chief executive officer of Chubb, said: "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. The 112.3% P&C combined ratio and core operating loss of 56 cents per share were negatively impacted predominantly by an after-tax COVID-related charge of $1.2 billion, which cost us essentially a quarter of our annual earnings and represents our best estimate of ultimate insurance losses resulting directly from the pandemic and consequent economic crises. Underlying our reported results, the P&C current accident year combined ratio excluding catastrophes was 87.4% versus 88.9% prior year, with current accident year underwriting income up 18% in constant dollars.
"Overall, P&C net premiums written grew 1.4% in the quarter in constant dollars, or about 4% after a one-time premium adjustment related to the COVID-19 economic impact as previously announced. We continued to capitalize on favorable commercial P&C underwriting conditions around the world in a number of important markets with adjusted net premiums written growing more than 9% in constant dollars. We are growing our exposures and market share, taking advantage of commercial P&C underwriting conditions where rates in many classes continued to rise in both North America and our international operations. These hard or hardening market conditions are spreading globally to more territories and classes at varying speeds, a rational response to prolonged overly competitive industry market conditions and the loss cost environment. Our consumer businesses, including accident and health, travel and personal lines, were heavily impacted given the pandemic's effects on consumer activity, and net premiums declined over 6%.
Greenberg added: "In sum, our company is very strong, operating at a high level around the globe, while our balance sheet is in excellent shape. I'm proud of all of my colleagues, especially our essential underwriting, claims and loss prevention teams, who never paused during the economic shutdown and height of the pandemic. They have and continue to serve our customers and distribution partners with distinction and represent the Chubb brand, which is all about service. I also want to thank our technology group which has kept us operating seamlessly during the work from home conditions."
