Chubb Estimates $1.4 Billion in Q2 Global Losses Due to the Coronavirus Pandemic
Chubb is one of the biggest insurance companies in the U.K. and the Federal Republic of Ireland. In the past, we talked about how they introduced cyberbullying insurance for high net-worth individuals.
Today, Chubb is in the news again after they disclosed the second quarter 2020 global net catastrophic losses estimated to be $1.4 billion due to the effect of the coronavirus pandemic.
The global property/casualty insurer estimated $1.8 billion in pretax catastrophe losses for Q2, or $1.5 billion after tax. Of that number, close to $1.4 billion in pretax catastrophe losses stem from the coronavirus pandemic, or $1.15 billion after tax. Losses from severe U.S. weather events and U.S. civil unrest constitute the difference, Chubb said.
The second quarter 2020 global catastrophe loss was released on July 6 by Chubb after the markets closed.
In his comments about the 2020 first-quarter earnings, the Chairman and CEO of Chubb, Evan Greenberg was of the opinion that coronavirus losses could be an issue for some time and that the degree of revenue impact is simply unknowable yet.
According to this insurance company, its pretax catastrophe loss estimate includes $605 million short-tail losses generated primarily from entertainment and commercial property-related business interruption and accident and health (A&H) products, not excluding travel insurance products.
Chubb Chairman and CEO also stated that they have experienced $553 million in losses related to liability insurance products, including professional liability (directors and officers, employment practices, professional liability, etc.) and workers compensation and other liability-related products.
The estimate also includes $107 million stemming from insurance credit exposures including surety, political risk and trade credit.
Substantially all of the losses for liability and credit-related insurance products are classified as incurred but not reported (IBNR) reserves, Chubb said. The loss estimate also includes a $100 million IBNR provision to account for the additional uncertainty in the estimates around the company’s property, casualty and credit-related exposures, given this unprecedented event.
Approximately 71 percent of the COVID-19 estimate relates to the company’s North America Commercial P/C Insurance segment and 28 percent covers the Overseas General Insurance segment.
How Chubb insurance lost billions of dollars as a result of this COVID-19 pandemic is really something underwriters of other insurance companies need to pay attention to.
