W.R. Berkley Corp. cautioned that its 2020 second quarter pretax catastrophe losses will reach $145 million, with more than half of that coming from COVID-19 related costs.
Out of that total, $85 million stems from COVID-19 claims, the specialty insurer and reinsurer said. Civil unrest created another $20 million in pretax catastrophe losses, and $40 million stems from severe weather-related events, W.R. Berkley said.
W.R. Berkley indicated its COVID-19 claims, due to the pandemic and resulting economic crisis, consist of losses mostly from “contingency and event cancellation policies, workers compensation, professional liability and other liability-related products, as well as commercial property-related business interruption coverages.
The COVID-19 loss breakdown also includes other potentially exposed lines of business along with defense costs and other loss adjustment expenses, W.R. Berkley said.
The company noted that a large chunk of its estimated COVID-19 catastrophe losses are classified as “incurred but not reported” reserves, “in recognition of the high level of uncertainty in the estimates given the unprecedented nature of this event.”
Aside from COVID-19 and the other catastrophe losses, W.R. Berkley said it expects “a modest underwriting profit” for Q2. As well, the company said its net premiums written for Q2 should be on par for the same period a year ago even with the economic downturn.
Another tidbit in advance of W.R. Berkley’s full Q2 earnings: Average rate increases excluding workers compensation were about 13 percent.
W.R. Berkley’s Q2 catastrophe loss disclosure follows a similar one issued recently by Chubb, which reported $1.8 billion of estimated pretax catastrophe losses for Q2. For Chubb, $1.4 billion of that number stems from the coronavirus pandemic.
W.R. Berkley plans to issue its full Q2 2020 earnings after the markets close on Tuesday, July 21. The company will subsequently hold an investor call to discuss its results.
Source: W.R. Berkley Corp.