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Chubb flags $2 billion hit from virus claims

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Chubb has warned of a $US1.37 billion ($2 billion) hit in pre-tax pandemic losses ahead of the release of its second quarter financial results later this month on July 28.

The US-based global insurer had reported a steep decline in first quarter net income to $US252 million ($360 million) from $US1.04 billion ($1.49 billion) a year earlier, and predicted that the pandemic would affect future earnings.

It estimates overall pre-tax catastrophe costs for the June quarter will top $US1.81 billion ($2.59 billion), with about 75% of it coming from COVID-19 claims, $US312 million ($446 million) from natural catastrophes and $US130 million ($186 million) from the recent civil unrest in the US.

Chubb says the pandemic loss guidance is a best estimate of ultimate insurance losses resulting directly from the global health crisis and consequent economic crises.

About $US605 million ($866 million) of the expected pre-tax virus losses will be made up of claims from entertainment, commercial property-related business interruption and accident and health clients.

Another US$553 million ($791 million) has been pencilled in for liability claims, including professional liability and workers’ compensation.

The insurer’s North America commercial property and casualty portfolio will account for 71% of the virus loss estimates and the overseas general insurance arm 28%.

Separately, Chubb expects a pre-tax hit of $US259 million ($371 million) as part of its second-quarter review of legacy exposures for molestation.