10-QPeriod: Q2 FY2020

Chubb Ltd Quarterly Report for Q2 Ended Jun 30, 2020

Filed July 31, 2020For Securities:CB

Summary

Chubb Ltd. (CB) reported a net loss of $331 million for the second quarter of 2020, a significant decline from the $1.15 billion net income in the prior year. This downturn was heavily influenced by a substantial pre-tax COVID-19 charge of $1.4 billion, primarily impacting the P&C combined ratio, which rose to 112.3% from 90.1% in the previous year. Despite the pandemic's impact, net premiums written saw a slight increase of 0.1% (1.9% in constant dollars), driven by growth in Commercial P&C lines, although this was moderated by exposure adjustments and premium returns related to the economic downturn. The company's financial condition remained solid, with total assets growing to $181.5 billion and shareholders' equity at $54.8 billion. Operating cash flow also improved significantly, reaching $2.0 billion for the quarter. Chubb has maintained a disciplined approach to capital management, including suspending share repurchases to preserve capital amidst economic uncertainty. Investors should monitor the impact of ongoing COVID-19 claims and the broader economic environment on future results, particularly the P&C combined ratio and investment income.

Financial Highlights

35 data points
Beta

Revenue

$8.98B

Net Income

-$331.00M

-3.7% Net Margin

EPS (Diluted)

$-0.73

Total Assets

$181.47B

Cash & Equivalents

$1.56B

Free Cash Flow

$1.99B

Financial Statements
Beta
Revenue$8.98B
Net Income-$331.00M
EPS (Basic)$-0.73
EPS (Diluted)$-0.73
Shares Outstanding (Basic)451.40M
Shares Outstanding (Diluted)451.40M

Key Highlights

  • 1Net loss of $331 million in Q2 2020, compared to a net income of $1.15 billion in Q2 2019, largely due to a significant $1.4 billion pre-tax COVID-19 charge.
  • 2P&C combined ratio deteriorated to 112.3% from 90.1% year-over-year, primarily driven by COVID-19 related catastrophe losses and unfavorable prior period development.
  • 3Consolidated net premiums written increased slightly by 0.1% to $8.4 billion, with P&C net premiums written down 0.4%, reflecting the economic impact of COVID-19.
  • 4Total assets increased to $181.5 billion and shareholders' equity stood at $54.8 billion, indicating a stable balance sheet.
  • 5Operating cash flow improved to $2.0 billion for the quarter, up from $1.4 billion in the prior year.
  • 6The company suspended share repurchases in April 2020 to preserve capital amidst the uncertain economic environment.
  • 7Net investment income decreased by 3.8% due to lower reinvestment rates and floating-rate obligations.

Frequently Asked Questions

The primary driver of the net loss of $331 million in the second quarter of 2020 was a substantial pre-tax COVID-19 charge of $1.4 billion. This charge impacted losses and loss expenses, significantly worsening the P&C combined ratio.

The COVID-19 pandemic negatively impacted net premiums written, leading to adjustments on in-force policies totaling $184 million in the Commercial P&C segment and $24 million in Overseas General Insurance. This resulted in a reduction of approximately 2.3 percentage points in consolidated net premiums written growth.

Chubb announced the suspension of its share repurchase program on April 22, 2020, to preserve capital and maintain financial flexibility in the current economic environment. No share repurchases were made during the second quarter of 2020.

The company's investment portfolio saw its fair value increase by $2.0 billion during the first six months of 2020, largely due to investing operating cash flows and unrealized appreciation, partially offset by the impact of COVID-19 and foreign exchange movements. Net investment income, however, decreased by 3.8% for the quarter due to lower reinvestment rates.