CNA Financial Corporation has announced that it expects to report a total catastrophe loss of $301 million pretax for the second quarter.
Of that figure, $182 million is related to COVID-19, $61 million related to civil unrest and $58 million related primarily to severe weather-related events.
The company says its Q2 COVID-19 losses follow a detailed review and analysis of existing and potential exposures in light of current information, and represent its best estimate of the ultimate insurance losses and loss adjustment expenses, including defense costs resulting from the pandemic and the consequent economic crisis.
CNA says the losses are substantially driven by healthcare professional liability with additional impacts from workers’ compensation, management liability, commercial property, trade credit, and surety.
Due to the recent timing of the event, emergence pattern of claims, and long tail nature of certain exposures the losses are substantially classified as incurred but not reported (IBNR) reserves.
The COVID-19 estimate does not include the impact from lower current accident year losses associated with favorable frequency as a result of shelter in place conditions.
CNA says those benefits are modest as they only apply to a portion of the portfolio as Healthcare, Construction and property coverages have seen limited benefit.
Separately, as part of its annual review of mass tort exposures, the CNA expects to recognise unfavourable prior period development of $50 million pretax, primarily due to New York reviver statute-related claims.
The reserve development represents the company’s best estimate of ultimate loss based on current information and more than offsets other favourable prior period development for the quarter.
Inclusive of these items, CNA expects to report a pretax underwriting loss for the quarter of $210 million.
Including the favourable impact from limited partnerships, common stock and non-redeemable preferred stock investments and reflecting the equity market rebound during the period, the company expects to report net income of $151 million and core income of $99 million for the quarter, subject to final quarter-end procedures.
