AXIS Capital President and CEO Albert Benchimol said that most of the company’s insurance policies don’t cover coronavirus pandemic-related claims. There are some that do, however, and those costs could potentially rise much higher if quarantines last beyond July.
The Bermuda-based specialty insurer and reinsurer reported $300 million in pre-tax catastrophe and other weather-related claims during the 2020 first quarter, including an estimated $235 million relating to the COVID-19 pandemic.
AXIS said its COVID-19 estimate is accurate assuming various global shelter-in-place or quarantine rules last through July 31.
“We have confirmed that most of our contracts do not provide coverage that applies to the current situation. Nevertheless, we have written policies that will respond to this pandemic,” Benchimol said in prepared remarks. “We are already processing claims and making payments where coverage exists. We proudly stand by our promise to be there for our customers in their time of need.”
AXIS said its catastrophe loss estimates stem from property-related coverages as well as event cancellation and accident and health coverages. It also reflects a global shelter-in-place order that remains in place until July 31, 2020. Weather-related events cost $65 million, pre-tax, including regional storms in the United States, U.K. floods and Australia wildfires.
AXIS Capital noted continuous improvement in its current accident year loss ratios excluding catastrophe and weather-related losses for its insurance and reinsurance businesses for the quarter.
Separately, AXIS expects to report a full limit loss of $10 million associated with the WHO pandemic swap. The loss is recorded in other insurance-related income (loss).
In addition, AXIS expects to report net investment income of $93 million for the quarter, reduced from $107 million in the first quarter of 2019, primarily attributable to lower hedge fund returns. The company also expects to report net unrealized losses of $61 million ($55 million excluding foreign exchange movements) attributable to its equity securities portfolio and net unrealized losses of $275 million ($224 million excluding foreign exchange movements) attributable to its fixed maturities portfolio, due to the significant decline in equity and credit markets at March 31, 2020.
AXIS plans to discuss its Q1 2020 financial results in detail during an investor call scheduled for May 5, 2020 at 9:30 a.m.
Source: AXIS Capital Holdings