Property and casualty insurer The Hartford has pre-announced unfavourable prior year reserve development of approximately $225 million (pre-tax) and current accident year catastrophe losses of $214 million (pre-tax) for the first-quarter of 2021.
The estimates for unfavourable reserve development includes, among other items, a charge to increase reserves related to a Settlement Agreement and Release with the Boy Scouts of America (BSA).
Under this arrangement, The Hartford has agreed to pay $650 million, pre-tax, for sexual abuse claims associated with policies mostly issued in the 1970s.
“The agreement, entered into after extensive negotiations, contemplates that, in exchange for The Hartford’s payment, the BSA and its local councils will fully release The Hartford from any obligation under policies it issued to the BSA and its local councils,” explains The Hartford.
The $650 million agreement relates to BSA’s Chapter 11 bankruptcy and will become effective upon the occurrence of certain conditions, including confirmation of the BSA’s global resolution plan; executed releases from the local councils; and approval from the abuse claimants and bankruptcy court.
Both The Hartford and BSA are hopeful of receiving court approval in the third-quarter of 2021, although this could be delayed.
Alongside the BSA settlement and subsequent increase in unfavourable prior year development, The Hartford has commented on its catastrophe experience ahead of the release of its Q1 2021 financials.
For Q1, The Hartford estimates current accident year catastrophe losses, net of reinsurance, of roughly $214 million. Of this, a significant $176 million, pre-tax, is from the impacts of the February winter storms in the U.S.