Bermuda domiciled reinsurer Everest Re Group, Ltd. has announced estimated pre-tax net first party losses of $150 million in Q1 for claims related to the COVID-19 coronavirus pandemic.
The reinsurer says that the majority of the losses are expected to come from its reinsurance operation. Overall, Everest Re expects its first-quarter 2020 combined ratio to be below 100% for the consolidated reinsurance and insurance businesses.
The pandemic loss estimate included in the combined ratio is an incurred but not reported (IBNR) provision for an estimated $150 million in losses. It’s worth noting that as this is IBNR and first party losses only, the total claims cost could be higher.
Everest Re says that this loss estimate is consistent with its philosophy of recognising and reacting to expected losses on a timely basis. Going forward, pandemic losses will be tracked separately and as an ongoing event, says the reinsurer.
Everest President and Chief Executive Officer (CEO), Juan Andrade, commented: “As the situation surrounding the Covid-19 pandemic continues to evolve, our thoughts are with everyone who has been impacted around the globe. Everest remains committed to supporting our clients, communities, and trading partners. These are unprecedented times, and our first priority is the safety of our employees, business partners, other stakeholders and their families.
“Our entire organization has been working remotely, continuing to serve our customers with the same high level of service that they have come to expect. Our capital position remains a source of strength, with high quality invested assets, significant liquidity, low financial leverage, and a low operating expense ratio. Our diversified global platform with its broad mix of products, distribution and geography is resilient.”
In addition, Everest Re has announced that it expects to achieve net investment income of $148 million for the first-quarter of 2020. According to the reinsurer, net investment income from limited partnerships is generally subject to a reporting lag averaging one quarter, so results from these investments in Q1 will be reported in Q2.
Since the beginning of the pandemic, Everest Re says that it has further repositioned its portfolio, moving up fixed income credit quality and reducing equity exposure.
