AXIS 'well-positioned' to weather the COVID-19 storm, says Benchimol
Bermuda-based re/insurer AXIS Capital Holdings has revealed an estimated net claims provision of $235 million, pre-tax, for the COVID-19 pandemic. Chief executive Albert Benchimol highlighted that the company is "well-positioned" to manage through the pandemic, supported by a "strong capital adequacy" and a balanced book of business.
This amount excludes $65 million, pre-tax, for the first quarter related to other weather-related events. Separately, the company expects to report a full limit loss of $10 million associated with the WHO pandemic swap.
The claims relating to the pandemic are largely attributable to property related coverages, but also includes event cancellation and accident & health coverages, and considers a global shelter in place order that remains in effect until July 31, 2020.
Other-weather related events include regional weather events in the US, UK floods and Australia wildfires.
AXIS Capital highlighted a continuous improvement in its current accident year loss ratios, excluding catastrophe and weather-related losses for its insurance and reinsurance businesses for the quarter.
The company expects to report net investment income of $93 million for the quarter, reduced from $107 million in the first quarter of 2019, primarily attributable to lower hedge fund returns.
The re/insurer also expects to report net unrealized losses of $61 million ($55 million excluding foreign exchange movements) attributable to its equity securities portfolio and net unrealized losses of $275 million ($224 million excluding foreign exchange movements) attributable to its fixed maturities portfolio, due to the significant decline in equity and credit markets at March 31, 2020.
"COVID-19 has disrupted both society and the (re)insurance marketplace on a global scale," said Benchimol. "We have experienced its impact in our homes and in the communities where we live and work.
"While COVID-19 continues to create unprecedented challenges and uncertainty for all carriers, we believe AXIS is well-positioned to manage through the pandemic. We entered 2020 with strong capital adequacy, a high-quality investment portfolio, and a well-balanced book of business. Our portfolio optimization actions are delivering tangible results. Our focus continues to be on providing our clients and partners in distribution with the same high level of service that they have come to expect from us. AXIS transitioned seamlessly to a remote work model and we are deeply appreciative to our staff for their tremendous resilience and commitment to advancing our business, as we navigate a rapidly evolving environment."
Benchimol added: "We have confirmed that most of our contracts do not provide coverage that applies to the current situation. Nevertheless, we have written policies that will respond to this pandemic. We are already processing claims and making payments where coverage exists. We proudly stand by our promise to be there for our customers in their time of need. We believe that the estimate that we have provided appropriately reflects losses that have been incurred assuming the shelter in place lasts through July 31st."
