WR Berkley pegs Q2 losses resulting from COVID-19; cat hit of $145m

Property/casualty insurer WR Berkley Corporation expects to report net catastrophe losses in the second quarter of 2020 of approximately $145 million pre-tax.

The company's loss estimate includes $85 million for COVID-19 related losses, $20 million for losses related to civil unrest and $40 million primarily attributable to severe weather-related events in the US.

The estimated COVID-19 losses in the second quarter of 2020 follow an updated thorough review and analysis of existing and potential exposures in light of newly available information, and represents the company's best estimate of its ultimate losses resulting directly from the pandemic and the consequent economic crisis.

It comprises losses primarily from contingency and event cancellation policies, workers' compensation, professional liability and other liability-related products, as well as commercial property-related business interruption coverages. It also includes other potentially exposed lines of business as well as defense costs and other loss adjustment expenses. A substantial portion of the losses are classified as incurred but not reported (IBNR) reserves, in recognition of the high level of uncertainty in the estimates given the unprecedented nature of this event.

WR Berkley expects to report a "modest underwriting profit" for the quarter. The company also anticipates that net premiums written in the second quarter of 2020 will be comparable to the second quarter of 2019, despite the economic downturn.

"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 2by the magnitude of industry losses for recent events," the company said in a statement. The Company’s average r2ate increases excluding workers' compensation in the second quarter of 2020 were approximately 13%.