Investment holding company Alleghany Corporation has seen the combined ratio of its reinsurance business TransRe increase 13.5 points in the first quarter to 107%, due to significant catastrophe losses primarily related to the coronavirus pandemic.
TransRe’s net premiums written increased 9.3% in Q1 from the first quarter of 2019, primarily reflecting an increase in various domestic casualty lines of business written.
TransRe’s results also included approximately $153 million of pandemic-related losses related to event postponement and cancellation coverage for conferences, sporting events and other property coverages and, to a lesser extent, increased loss provisions for accident and health and trade credit.
Of the total pandemic-related losses, approximately half related to specific event cancellation treaties.
Total exposed limits on this portfolio are approximately $180 million for 2020 and $40 million for 2021.
TransRe’s ultimate losses will depend on the timing of crowd restrictions being lifted, whether events can be rescheduled and how far in advance an event is postponed or cancelled.
Alleghany itself fell to a $361 million net loss for the quarter, compared to net earnings of $440 million in the prior year quarter.
Net premiums written increased 10.7% in the first quarter of 2020 from the first quarter of 2019.
Underwriting loss was $24 million for the first quarter of 2020, compared with an underwriting profit of $85 million for the first quarter of 2019.
Underwriting loss in the first quarter of 2020 included $153 million of catastrophe losses at TransRe related to the COVID-19 pandemic.
Net investment income decreased 8.9% to $112 million for the first quarter of 2020 from $123 million for the first quarter of 2019 due to losses on credit-related partnership investments.
Alleghany capital revenue decreased 9.4% to $457 million for the first quarter of 2020 from $505 million for the first quarter of 2019.
“In these extraordinary times, we are grateful for healthcare and other critical workers on the front lines of the global COVID-19 pandemic and our thoughts are with those most directly affected,” said Weston Hicks, President and Chief Executive Officer.
“I am proud of how employees across the Alleghany family of companies have responded to the crisis as they have demonstrated continued dedication to supporting customers, their communities and front-line efforts.
“Although our first quarter results were impacted by the pandemic crisis and the related significant financial market dislocation, our operating results were positive. We continue to see strong premium growth and underwriting results at RSUI and improving underlying trends at TransRe, aside from the pandemic-related losses recognized in the quarter.
“The pandemic losses at TransRe were for event cancellation and other specific covers providing affirmative pandemic coverage, as well as increased loss provisions on certain lines including accident and health and trade credit in the quarter.
“Although most of RSUI’s contracts do not provide coverage for pandemic losses, and in fact specifically exclude losses related to pathogens, in cases where coverage is provided, we will respond as quickly as possible and pay legitimate claims.
“Despite current pandemic-related challenges and project delays that will continue in 2020, most Alleghany Capital subsidiaries remain very well positioned with strong backlogs and long-standing customer relationships that will enable them to emerge from this crisis in a position of strength.”
