COVID-19 impact similar to 'moderately sized catastrophe loss': Liberty Mutual CEO

The impact of COVID-19 on Liberty Mutual's insurance operations is expected to be similar to a "moderately sized catastrophe loss", according to its chief executive David Long.

Liberty Mutual expects the to have a larger impact on its investment portfolio and COVID-19-related economic downturn to dampen its net written premium growth in the future quarters.

The company said that the areas most exposed to insurance losses include general liability, trade credit, business interruption, workers compensation, event cancellation coverage.

According to the preliminary estimates for the first quarter of 2020, the net written premium is expected to be approximately $10 billion, a combined ratio of approximately 97 percent, and total equity of approximately $23 billion.

"While the pandemic is still evolving, from a financial perspective we expect the impact of COVID-19 on our insurance operations to be similar to those we have experienced for a moderately sized catastrophe loss," said Long. "The areas of our business most exposed to insurance losses related to the pandemic and resulting economic downturn include trade credit, general liability, workers compensation, and event cancellation coverage, among others."

Long added: "We anticipate the larger impact from COVID-19 will come through our investment portfolio, where we have taken realized and unrealized losses caused by the recent market downturn. We expect our net investment income will be dampened in the coming quarters as well by lower valuations on our private equity investments, which are reported on a quarter lag and thus not recognized in our first quarter results.

"Our liquidity position remains excellent, with access to over $6 billion in total, not including current cash on hand of $1.4 billion. We are confident in the strength and resiliency of our operations to allow us to endure these uncertain times and continue to serve our customers."