Chubb estimates $1.8B in Q2 global cat losses

Chubb Ltd. said Monday it estimates $1.81 billion in net pretax global catastrophe losses for the second quarter, the vast majority of which are COVID-19 related, or $1.51 billion after tax.

Chubb said in its statement the total includes $1.37 billion pre-tax, or $1.16 billion after tax, of COVID-19 global pandemic losses.

It also estimates other natural catastrophe losses of $312 million pretax, or $249 million after tax, which are primarily attributable to severe weather-related losses in the U.S., as well as civic unrest-related losses in the U.S. of $130 million pretax and $104 million after tax.

The COVID-19 pretax losses reflect short-tail losses of $605 million generated primarily from entertainment and commercial property-related business interruption and accident and health products, including travel insurance products; $553 million related to liability insurance products, which includes directors and officers, employment practices and professional liability, workers comp and other liability-related products; and $107 million in losses related to insurance credit exposures, including surety, political risk and trade credit.

The insurer said the loss estimate also includes a $100 million incurred-but-not-reported provision to account for the additional uncertainty related to COVID-19.

Chubb said the COVID-19 estimate does not include a credit for potentially lower current accident year losses from a decrease in exposures, except for a modest benefit for certain casualty claims-made classes.

It said 71% of the COVID-19 estimate related to its North America property/casualty insurance segment and 28% to its overseas general insurance segment.

The catastrophe net losses are net of reinsurance and include reinstatement premiums. They also reflect losses generated from the company’s commercial and personal property and casualty, accident & health and life insurance business, as well as its reinsurance operations globally.

Chubb reported pre-tax catastrophe losses of $275 million for 2019’s second quarter, vs. $211 million for 2018’s second quarter.

Chubb said also it will reduce its net written premiums in the second quarter by about $184 million to reflect its estimate of the exposure adjustments its in-force policies have, and will result from, the impact of economic contraction.

Separately, the insurer said as part of its second-quarter review of legacy exposures for molestation, it expects to recognize unfavorable prior period loss development for U.S. child molestation of $259 million pre-tax and $205 million after tax.

More insurance and risk management news on the coronavirus crisis here.