Argo expects $26m COVID-19 hit from BI claims and potential litigation
Bermuda-based specialty re/insurer Argo Group International Holdings is expecting its first quarter of 2020 to be "adversely affected" by losses related to the impact of COVID-19 pandemic and volatility in the global financial markets.
The re/insurer expects to report pre-tax net catastrophe losses of $29 million, including approximately $26 million related to the COVID-19 pandemic, primarily resulting from contingency and property exposures in the company’s international operations and property exposures in its US operations.
Argo said the property losses are linked to sub-limited affirmative business interruption coverage, primarily in certain international markets, as well as expected costs associated with potential litigation.
Charges related to the COVID-19 pandemic represent estimated losses incurred through March 31, 2020. Argo expects to incur some additional losses and claim related expenses in subsequent quarters depending on the timing and duration of impacts related to the COVID-19 pandemic. Additionally, net prior year reserve development was not material in the first quarter of 2020.
Investment results in the quarter were adversely impacted by extreme volatility in interest rates, credit spreads and equity markets. As a result, Argo expects to report pre-tax net realized and unrealized investment losses of $162 million, partially offset by net investment income of $35 million for the first quarter of 2020.
“Our company has a long history of assisting policyholders as they navigate unprecedented times,” said Argo chief executive officer Kevin Rehnberg. “While this continuing event is significant, Argo remains financially strong and will continue to support our customers and producers through the challenges ahead."
