Chubb Reports Q1 Net Income Drop; Sees ‘Meaningful’ Coronavirus Impact Ahead

Chubb said that the coronavirus pandemic’s effects on its bottom line were relatively benign in the 2020 first quarter. But all bets are off for the months ahead.

The global property/casualty insurer reported net income of $252 million, or $0.55 per share during the 2020 first quarter, which was down from more than $1 billion, or $2.25 per share a year ago. Chubb attributed the results in large part to financial market volatility in the credit, equity and foreign exchange markets, though its underwriting income grew across the board.

And while it is early yet, Chubb Chairman and CEO Evan Greenberg warned that the COVID-19 global pandemic will have an intense impact on the global insurance industry’s bottom line in the months ahead.

“The coronavirus is delivering a severe blow to the global economy. How long and how deep is unknown,” Greenberg said in prepared remarks. “It will have a major impact on the global insurance industry in terms of both losses and revenue.”

Chubb is not immune. The insurer said it anticipates that the pandemic “will have a meaningful impact” in its revenue as well as net and core operating income in its second quarter, and potentially longer, due to anticipated jumps in claims relating to “both the pandemic and recessionary economic conditions.”

Q1 Result Highlights

Chubb booked P/C net premiums written at $7.3 billion, up nearly 9 percent from Q1 2019. Global P/C underwriting income excluding agriculture landed at $764 million, a growth of 19.5 percent. P/C underwriting income came in at $778 million, 9.3 percent higher than the $712 million produced in Q1 2019.

Pre-tax net investment income reached $861 million, 3 percent higher than the year before. But book and tangible book value per share dipped by 5.5 percent and 7.5 percent, respectively. Chubb blamed this result on the market-to-market impact from financial market volatility in its investment and variable annuity reinsurance portfolios and from unfavorable foreign currency movement. But this should be a temporary phenomenon, Chubb said, as the market “had substantially recovered” as of April 20, 2020.

Pre-tax catastrophe losses during the quarter reached $237 million. That includes $224 million from global weather-related events and $13 million from COVID-19 related costs as of Q1.

Chubb’s P/C combined ratio was 89.1 in the 2020 first quarter, slightly better than the 89.2 produced in the previous year.

Source: Chubb