Chubb's Greenberg lambasts forced retro BI claims as 'harmful' and 'unconstitutional'

Property/casualty insurer Chubb has warned that COVID-19 will have a "meaningful impact" on its revenue as well as net and core operating income in the second quarter and potentially future quarters as a result of an increase in insurance claims due to both the pandemic and recessionary economic conditions.

Chief executive Evan Greenberg stated that "this will be an earnings event for our company", while pointing that the balance sheet and liquidity remain strong.

Greenberg asked insurers to push back against the "self-inflicted harm from government attempts to force insurers to retroactively pay uncovered business interruption claims", which he said was simply "unconstitutional".

For the first quarter of 2020, the insurer posted a net income of $252 million, compared with $1.04 billion prior year. The core operating income was $1.2 billion, compared with $1.17 billion in Q1 2019.

Chubb said the quarter was marked by financial market volatility in the credit, equity and foreign exchange markets, which impacted net income and book value.

The property and casualty (P&C) combined ratio was 89.1 percent and the Global P&C combined ratio, which excludes agriculture, was 89.2 percent. P&C net premiums written were $7.3 billion, up 8.9 percent.

Book value was unfavorably impacted by total after-tax net realized and unrealized losses of $3.7 billion, including $2.2 billion in the investment portfolio. Foreign exchange also unfavorably impacted book value by $896 million. The company believes this market price-driven impact will in all likelihood be largely transient.

Pre-tax catastrophe losses were $237 million in the quarter, including $224 million from global weather-related events and $13 million related to the COVID-19 global pandemic, which will be tracked as a separate ongoing catastrophe event.

Greenberg, chairman and CEO, said: "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.

"The coronavirus is delivering a severe blow to the global economy. How long and how deep is unknown. It will have a major impact on the global insurance industry in terms of both losses and revenue. For Chubb, we expect our premium growth momentum to be impacted for a period as insurance exposures in important areas shrink. This will be an earnings event for our company; our balance sheet and liquidity remain strong.

"We are operating day to day at a very high level globally and I am confident Chubb will weather this difficult time and emerge stronger."

Greenberg added: "As the U.S. gains better control over the virus and we look forward to reopening the economy, the ability to test, digitally trace and isolate is fundamental to suppressing the spread of the virus while returning to more normal economic and social activity. It is also important at this time that we do not add unnecessarily to the great uncertainty we are already experiencing. To that end, we should prevent self-inflicted harm from government attempts to force insurers to retroactively pay uncovered business interruption claims, which is simply unconstitutional."