Insurance and reinsurance group AXA has cited business interruption claims as one of the “most material impacts” in its new forecast for EUR 1.2 billion of losses in its property and casualty (P&C) businesses due to the Covid-19 pandemic.
AXA has been a significant purchaser of reinsurance protection in recent quarters and also cedes a share of certain losses from its specialty insurance and reinsurance unit AXA XL to capital market investors.
This morning, the insurer disclosed a forecast for a EUR 1.2 billion loss due to Covid-19 in its P&C business, saying it would set that amount of reserves for the event.
Driving that loss are a range of areas of business, but the insurer said that it expects the “most material impacts”, in terms of losses, to be seen in Business Interruption and Event Cancellation lines of P&C underwriting.
To a lesser extent, AXA expects to see claims also within its lines of business such as D&O, Liability and Travel, although the insurer noted these could be partly offset by reduced claims in some areas, especially motor where claims frequency was down during the pandemic lockdown.
In AXA’s life and health business, the company said that so far there has been no material deviation in terms of claims.
“The estimates provided above are based on management’s current assessment and are subject to change depending on the continued evolution of the Covid-19 pandemic and its related impacts,” AXA explained.
Given the continued uncertainty over Covid-19’s impacts in insurance and reinsurance, particularly how long the tail of claims could be from the pandemic, there is always the chance of claims being added in quarters to come for major players such as AXA.
AXA said that these new estimates are more precise, compared to disclosures made in the Q1 results it reported.
Business interruption claims tend to come from property policies, which does mean there is a chance of some leakage to reinsurance and perhaps even ILS markets, from certain cedents.
It’s not possible to know at this time whether AXA feels it could claim on its reinsurance for these losses, but at EUR 1.2 billion it seems likely that some level of protection will respond somewhere in the companies reinsurance arrangements.
AXA cites BI as “material” in EUR 1.2bn Covid-19 P&C loss estimate was published by: www.Artemis.bm
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Original Article Posted at : https://www.artemis.bm/news/axa-cites-bi-as-material-in-eur-1-2bn-covid-19-pc-loss-estimate/