Arch Capital said that the catastrophe losses have been estimated across its property-casualty insurance and reinsurance segments
Bermuda-based Arch Capital Group expects to report pre-tax catastrophe losses in the range of $205m-$225m in the second quarter of 2020.
The speciality and mortgage insurance company said that the catastrophe losses have been estimated across its property-casualty insurance and reinsurance segments, after taking into account the reinsurance recoveries and reinstatement premiums.
The estimates include $170m-$180m related to the exposure to Covid-19 pandemic claims across the world and a range of estimates of $35m-$45m for losses associated with the civil unrest claims in the US along with other catastrophic events in the second quarter of this year.
Arch Capital said that the range of estimates pertaining to the Covid-19 outbreak is in addition to the estimate of $87m that was disclosed previously by the company in its quarterly report on Form 10-Q for Q1 2020.
The company further said that the estimates range is only for its insurance and reinsurance segments and that the Covid-19 outbreak had resulted in direct and indirect impact on its businesses.
According to Arch Capital, the most impacted unit from the virus outbreak is its mortgage segment in the form of increased delinquency rates and also possibly higher loss experience. The company said that for its US primary mortgage insurance unit, loss reserving under GAAP is based on the delinquency rates that are reported.
The company stated: “At this time, there are significant uncertainties surrounding the ultimate number of claims and scope of damage resulting from the pandemic.
“The Company’s estimates across its insurance and reinsurance segments are based on currently available information derived from modeling techniques, including preliminary claims information obtained from the Company’s clients and brokers, a review of relevant in-force contracts with potential exposure to the pandemic and estimates of reinsurance recoverables.”
Arch Capital Q1 2020 and Q1 2019 net incomes
For the first quarter of this year, the Bermuda-based company reported net income of $133.7m compared to $438.1m made in Q1 2019. On the other hand, Arch Capital’s Q2 2019 net income was $458.6m.
Earlier this year, Arch Capital signed a deal to buy a stake of 29.5% in Coface, a France-based provider of trade credit insurance, for approximately €480m from French banking company Natixis.