22 April 2020News

Chubb’s profits collapse in Q1 amid global market volatility

Chubb saw its profitability collapse in Q1 2020 compared to the same period in 2019, with the company citing the significant market volatility to explain the disappointing numbers.

Net profit for the group was $252 million for Q1 2020, compared to $1.04 billion in Q1 2019.

Gross written premiums were $9.75 billion for Q1 2020, compared with $9.11 billion for Q1 2019. The global P&C combined ratio was 89.2 percent, compared with 90.2 percent prior year.

Chubb said it had made a loss of around $560 million related to the negative mark-to-market impact on its variable annuity reinsurance portfolio, following significant volatility in the markets. Another $129 million of losses related to the adoption of new accounting guidance that accelerated the marking to market of certain positions.

Evan Greenberg, chairman and chief executive officer of Chubb, argued Chubb had “a very good first quarter that demonstrated the underlying health and strength of our company as we entered this period of the COVID-19 global pandemic.”

However, he noted COVID-19 had dealt “a severe blow to the global economy,” and will have “a major impact on the global insurance industry, in terms of both losses and revenue.” Premium growth momentum is likely to be impacted for a period, he warned, but while it will affect earnings, Chubb’s “balance sheet and liquidity remain strong,” he said.

Greenberg also warned the US government should not impose “self-inflicted harm” by forcing insurers to retroactively pay uncovered business interruption claims, which he said would be “simply unconstitutional."