Chubb’s outlook remains susceptible to COVID-19 due to business concentration in the US non-life insurance segment, the potential economic downturn in the region and a rise in claims in certain products, according to GlobalData, a leading data and analytics company. However, its relatively small reliance on the life segment should help to reduce losses.
Chubb has a diversified business structure, with operations across most lines. It is largely concentrated on non-life insurance, which accounted for 83% of its premiums in 2018. The company is particularly vulnerable to the pandemic as it has an extremely strong presence in the US, which has the highest number of cases in the world and accounted for 63.6% of Chubb’s revenue in 2018.
Deblina Mitra, Insurance Analyst at GlobalData, comments: “Chubb’s relatively low (14%) exposure to the life side is a positive in the current climate. That part of its business faces the potential adverse impact of COVID-19 in the form of mortality risk, prolonged low interest rates, unfavorable capital markets and a decline in product sales.
“However, the predominant presence of the insurer in the US market makes it vulnerable to the challenging economic and business environment. On a more positive note, Asia is the second-most important market for Chubb, with 17.6% of total premiums. A low number of COVID-19 cases in Taiwan and South Korea and the onset of economic activity in the region makes for a better scope for business recovery.”