Chubbs disclosure of second quarter 2020 global net catastrophe losses underscores the damage covid-19 is doing to some carriers’ bottom lines.
The global property / casualty insurer estimated $1.8bn in pre-tax catastrophe losses for Q2, or $1.5bn after tax of that number, close to $1.4bn in pre-tax catastrophe losses stem from the coronavirus pandemic or $1.5bn after tax. Losses from severe US weather events and US civil unrest constitute the difference, Chubb said,
Chubb released its Q2 catastrophe loss estimates early July after the market closed.
Coronavirus losses could be an issue for some time, Chubb chairman and CEO Evan Greenberg suggested during his comments about 2020 first quarter earnings earlier this year. “in this case the degree of revenue impact is simply unknowable, Greenberg said at the time.
According to the insurer its pre-tax catastrophe loss estimates includes $605m short-tail losses generated primarily from entertainment and commercial property-related business interruption and accident and health (AH) products including travel insurance product and $533m in losses related to liability insurance product, including professional liability (director and officer, employment practises, professional liability etc) and workers compensation and other liability related products.
The estimate also includes $107m stemming from insurance credit exposures including surety, political risk and trade credit.
Substantially all of the losses for liability and credit-related insurance product are classified as incurred but not reported (IBNR) reserves, Chubb said the loss estimate also include a $100m IBNR provision to account for the additional uncertainty in the estimates around the company’s property, casualty and credit related given this unprecedented event.
Approximately 71% of the covid-19 estimate relates to the company’s not American commercial P/C insurance segment and 28% covers the overseas general insurance segment.