Bermuda-based reinsurer Everest Re Group, Ltd. has reported losses related to the COVID-19 pandemic of $160 million in the second-quarter of 2020, taking the firm’s total hit from the ongoing crisis to $310 million.
The reinsurer states that of its total Q2 2020 pandemic hit, $130 million is allocated to its Reinsurance segment and $30 million to its Insurance segment.
Everest Re notes “significant uncertainties” and says that owing to the unprecedented nature of this event, its pre-tax $160 million of losses related to the coronavirus are substantially classified as incurred but not reported (IBNR).
Primarily, these losses are from policies covering event cancellation and postponement, business interruption and workers’ compensation, and include a provision for loss adjustment expenses. At the same time, the firm’s estimate does not account for legal, regulatory or legislative intervention that could retroactively mandate or expand coverage provisions.
In Q1 2020, Everest Re reported losses related to the COVID-19 pandemic of $150 million, as its net income declined year-on-year to $16.6 million.
As well as the financial implications of COVID-19, Everest Re has announced that it expects to incur pre-tax net catastrophe losses of $15 million arising from claims related to civil unrest in the U.S., all of which falls within the firm’s primary segment.
Additionally, the reinsurer warns of a dip in net investment income to $38 million (pre-tax) in the second-quarter of the year. However, since the firm reports most limited partnership income on a one quarter lag, the downturn in equity markets in Q1 2020 is being reflected in the company’s Q2 results.
“In turn, the improvement in global equity markets during the second quarter will be reflected in increased limited partnership investment income in our third quarter results,” explains Everest Re.
