Evan Greenberg cautioned that the pandemic’s impact will cause insurers to face their largest challenges.
Chubb Ltd Chief Executive Officer Evan Greenberg released a statement warning that the coronavirus will be the largest event in insurance industry history.
The insurance company recorded $13 million in losses linked to COVID-19 during the Q1 2020.
Greenberg stated that “this event will be the largest event,” in insurance industry history, on an earnings call in which he shared Chubb’s first quarter results for 2020. The CEO pointed to both the direct impact of the virus and the ripple effect of the pandemic on the economy as having an affect on both the liability and asset side of the balance sheet.
He went on to describe the way a pandemic affects insurers in the same way as a catastrophe. He said that infectious virus spread is particularly damaging as it is not restricted by geographic region nor is it limited by time, such as a single storm or seasonal event. Insurers have already been receiving claims from policyholders filing for issues such as forced shutdowns and other ways they have been impacted by the coronavirus. Moreover, as the markets have been sliding, insurers are watching their investments tank.
Greenberg said that the insurance industry history will record the coronavirus as the largest event so far.
The Chubb CEO warned that the initial losses from the coronavirus is only the start. He said that it will continue to have a “meaningful impact” on profits and revenues through the second quarter as well. He stated that while the fallout will impact insurance company earnings, it won’t shake the insurer’s capital position.
“We’re in an unprecedented moment of historic proportions,” he said yesterday. “None of us living today has experienced an event of this nature or magnitude. It is at once surreal and catastrophic. As a country, we will manage through and heal both our society and economy, and it will take time.”
This will be a unique place in insurance industry history for all insurers. Some will fare better than others. According to Keefe, Bruyette & Woods analyst, Meyer Shields, Chubb stands to fare better than many others. A note to Shields’ clients said that Chubb’s “superior underwriting capabilities and above-average policy language discipline,” will place it at a lower risk of losses than its market share would suggest.