Covid & riots lift W. R. Berkley’s Q2 losses above estimates

The impacts of the Covid-19 pandemic and costs from the riots and civil unrest in the U.S. have lifted insurance carrier W. R. Berkley’s second-quarter loss burden well above estimates.

wr-berkley-logoW. R. Berkley reported an estimated $145 million pre-tax catastrophe loss burden for the second-quarter of 2020.

The largest driver of these losses is the Covid-19 pandemic, with W. R. Berkley reporting $85 million for coronavirus related losses during the period.

A portion of these losses are from commercial property insurance business interruption claims, but the majority come from lines of business such as contingency and event cancellation policies, workers’ compensation, professional liability and other liability-related products.

Some of the Covid-19 losses come from other potentially exposed lines of business as well as defense costs and other loss adjustment expenses.

Of the pandemic losses W. R. Berkley estimates it will book in Q2, the majority are incurred but not reported (IBNR) reserves, which the carrier says is due to “the high level of uncertainty in the estimates given the unprecedented nature of this event.”

On top of the pandemic loss reserves being set for Q2, W. R. Berkley has also reported another $20 million os losses related to civil unrest and rioting in the United States, plus $40 million primarily attributable to severe weather-related events.

The company said it still hopes to report a positive income for the quarter, despite these events.

Analysts at KBW said that the Covid-19 loss reserves are more than double the amount estimated.

W. R. Berkley also said that despite the economic downturn caused by the pandemic it still expects to book flat premiums.

This is largely down to the higher premiums being charged, it seems.

“The industry’s fundamental need for pricing to reflect rising loss costs drove the acceleration of rate increases through the first quarter of 2020. That momentum is continuing and is further reinforced by the magnitude of industry losses for recent events,” the carrier explained.

For the second-quarter, W. R. Berkley reports rate increases, excluding workers’ compensation, of roughly 13%.

As we explained last week, analysts believe that Q2 catastrophe losses will be as much as 25% above average for many carriers operating in the United States.

Covid & riots lift W. R. Berkley’s Q2 losses above estimates was published by: www.Artemis.bm
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Original Article Posted at : https://www.artemis.bm/news/covid-riots-lift-w-r-berkleys-q2-losses-above-estimates/